A company is solvent if, and only if, the company is able to pay all of the company's debts, as and when they become due and payable. A company that is not solvent is insolvent.
An unfair dismissal application lodged against an employer who is declared insolvent by a Court or a provisional liquidator can proceed in the Fair Work Commission.
Section 500(2) of the Corporations Act 2001 (Cth) (Corporations Act) applies to a creditors’ voluntary winding up where the company is insolvent. The Corporations Act provides:
Execution and civil proceedings
(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.
The Commission has found that an unfair dismissal application falls within the meaning of ‘civil proceedings’ in s.500(2) of the Corporations Act.
The Commission is not a ‘Court’ and is therefore unable to grant leave as prescribed in s.500(2) of the Corporations Act.
However, s.500(2) of the Corporations Act does not apply a members’ voluntary winding up where the company is solvent (at the time of making a special resolution under s.491 of the Corporations Act) and the decision to wind up is made by a majority of the directors.
The Australian Government provides financial assistance to cover certain unpaid employment entitlements to eligible employees. This help is available to an employee after losing their job because their employer went bankrupt or into liquidation through the Fair Entitlements Guarantee (FEG).
For more information visit the the Fair Entitlements Guarantee (FEG) page on the Department of Employment's website, or call the FEG Hotline on 1300 135 040.
 Corporations Act 2001 (Cth) s.95A.
 Butterworths Australian Legal Dictionary, 1997, at p. 604.
 Smith v Trollope Silverwood & Beck Pty Ltd, PR940508 (AIRCFB, Giudice J, Ross VP, Whelan C, 17 November 2003), [(2003) 142 IR 137].
 Corporations Act 2001 (Cth), s.500(2).
 Grujevski v Queens Wharf Brewery  FWC 3725 (Gooley DP, 5 June 2014) at para. 10; citing Smith v Trollope Silverwood & Beck Pty Ltd, PR940508 (AIRCFB, Giudice J, Ross VP, Whelan C, 17 November 2003), [(2003) 142 IR 137]
 Woolley v Glenjac Pty Ltd t/a Aussie Farmers Direct  FWC 7833 (Hatcher VP, 4 November 2014) at para. 16; citing Catto & Ors v Hampton Aust Ltd (In Liq) & Anor  SASC 6594 (16 October 1998), [(1998) 29 ACSR 225]; Awada v Linknarf  NSWSC 873 (26 September 2002), [(2002) 55 NSWLR 745].