Bankruptcy is a process where people who cannot pay their debts give up their assets and control of their finances, either by agreement or court order, in exchange for protection from legal action by their creditors.
Bankruptcy can affect the Fair Work Commission's ability to deal with an application for unfair dismissal. The Bankruptcy Act 1966 (Cth) (Bankruptcy Act) contains provisions which may have the effect of preventing an undischarged bankrupt from commencing or continuing litigation.
An undischarged bankrupt is a person who has been declared bankrupt and has not been released from their status as bankrupt.
In Millington v Traders International a Full Bench of the Commission held that the Commission could deal with an application for unfair dismissal made by an employee after they were declared an undischarged bankrupt.
The Full Bench also observed that had the employee’s application been made before she was declared an undischarged bankrupt, then it was ‘highly likely’ that her application would have been stayed by operation of s.60(2) of the Bankruptcy Act and not been heard by the Commission.