Approved Worker Entitlement Fund (AWEF)Version: 9.8.8
A worker entitlement fund is a fund for employee long service leave, sick leave or redundancy payments. These funds are often referred to as redundancy trusts or redundancy funds. Although these funds operate in a variety of ways, their purpose is to manage employee entitlements and provide portability and protection.
An entity can apply to the Commissioner of Taxation for endorsement to be an approved worker entitlement fund or to operate an approved worker entitlement fund.
An employer can make regular contributions to a fund on behalf of their employees. When an employee ceases employment with an employer who is making a contribution, then the employee may be entitled to receive a payment from the fund. This is dependent upon the types of contributions and the terms of the applicable awards and industrial agreements.
Fringe Benefits Tax (FBT) exemption
Certain contributions made to an approved worker entitlement fund are exempt from fringe benefits tax (also known as an exempt benefit). Contributions to an approved worker entitlement fund are defined by Commonwealth, State and Territory laws and may include:
- redundancy payments,
- long service leave, and
- sick leave