What Employment Restrictions exist for Bankrupts?
When a state of bankruptcy is declared, there are understandably many questions regarding future employment prospects. According to the Bankruptcy Act 1966, bankruptcy does not impact one’s ability to seek or gain employment. The Act, however, proscribes a bankrupt from managing a trust as either a solicitor or an accountant in any capacity. Additionally, the Corporations Act specifically excludes undischarged bankrupts from holding a company directorship.
Does a Bankrupt need to tell their Employer about their Bankruptcy?
Despite this, a bankrupt does not need to disclose his or her status to an employer unless their occupation is on the list of restricted professions. Neither will the Australian Financial Security Authority (AFSA) inform a current employer if one becomes bankrupt. These restrictions may, however, also impact a bankrupt’s professional memberships and licences as well.
Licences and Professional Memberships for Bankrupts
The restrictions that do impact a bankrupt’s income and employment opportunities are mostly concerned with licenses and professional memberships. One such example is that a building licence would in most states and territories be suspended. Chartered Accountant memberships, trade licenses, such as those for electricians and plumbers would also be impacted.
Professional qualifications such as finance broker, travel agent and real estate licenses are also included with those likely to be suspended due to bankruptcy. Additionally, undischarged bankrupts are forbidden to serve in the police, act as Members of Parliament or as a Justice of the Peace. They will also be in most circumstances prohibited from practising as a solicitor, tax agent or public accountant or to hold funds in trusts for others.
Can a Bankrupt Operate a Business?
Operating a business as a sole trader is in most circumstances permitted. This permits a bankrupt to earn revenue through operating the business as per usual. As a Trustee will have control over the bankrupt’s assets for the duration of the bankruptcy process, the bankrupt must inform the Trustee about any changes to income, assets, employment or business operations. While employed by someone else, a bankrupt can continue to earn income as normal. As before, this must be reported to the Trustee as it constitutes a change in circumstances. A Trustee is generally the first contact for all concerns regarding specific income or business circumstances.
Whilst bankruptcy may impact certain professions and license holders, in general, it is not a process that will negatively impact a bankrupt’s employment opportunities. Neither will it impact a bankrupt’s ability to earn an income and create savings. The Trustee will notify the bankrupt when it is necessary to make payments.
To learn more about the Bankruptcy process, contact us on 1800 246 801 or email us at [email protected]
The article was written by Katerina Forest (Supervisor) – SV Partners Brisbane