The Guardian February 2, 2000

Workers robbed bosses grab entitlements

by Anna Pha

The 342 workers sacked from National Textiles in the northern NSW Hunter 
Valley last week and owed $11 million in wages and entitlements, still do 
not know whether they will receive their full pay-out. They are the latest 
in a series of sackings where workers have been robbed of their 
entitlements. Few receive any publicity. National Textiles made the news 
because the company's chairman is the brother of Prime Minister John Howard 
and the trade unions took up the struggle on their behalf.

Over the last 18 months thousands of workers have been laid off and robbed 
in this way as companies folded. Some were genuine bankruptcies, but others 
were a deliberate manipulation of company structures and the draining of 
funds to avoid paying the legal entitlements of workers.

In the case of National Textiles, its low paid workforce had forgone a wage 
rise to help the company trade out of difficulties. And while the workers 
were helping the company two of the directors helped themselves to an extra 

The managing director was paid a total of $354,993  a reward for robbing 
the workforce.

Last year, after the sacking of the Oakdale miners, also with their 
entitlements unpaid, Workplace Relations Minister Peter Reith promised to 
have in place legislated protection before January 1 this year. But there 
is no legislation.

Now Reith is proposing a "basic safety net" as a "social security measure" 
with the government  that is, taxpayers  initially footing the bill. At 
some unspecified time in the future employers might make a contribution.

This "safety net" would be based on up to four weeks unpaid wages, four 
weeks annual leave, 12 weeks long service leave, four weeks redundancy and 
five weeks payment in lieu of notice  but with a cap per employee of 
$20,000. (Peanuts compared with the hundreds of thousands that Reith will 
be pensioned out on!)

In the case of the National Textiles workforce, the $20,000 ceiling would 
result in only a partial payment of their entitlements.

"The cap of $20,000 on a 29 or 30 week scale of entitlements proposed by 
Reith is an insult to low paid workers like those in the Textile, Clothing 
and Footwear industries", said Tony Woolgar, National Secretary of the 
Textile, Clothing and Footwear Union of Australia (TCFU).

The inadequacy of Reith's proposal becomes evident when specific cases are 

One of the sacked National Textiles workers, after 31 years service would 
receive $7,900.89 under Reith's proposal as against $43,826.45 under the 
National Textiles Agreement. This worker would be thieved of $35,925.56!

Calculations for another worker, with seven and a half years of service, 
would receive $8,689.72 instead of $17,809.97.

Letting employers off the hook

Reith's proposals not only cheat workers of their full legal entitlements 
but they also absolve employers of responsibility.

Directors milk the funds, pocket large salaries, bonuses and share issues 
but do not carry personal liability for their actions.

The manipulation of company law allows unscrupulous employers to siphon off 
funds to related companies or subsidiaries who have no legal responsibility 
to the sacked workers.

Some have restructured leaving their employees in a shell company with no 
assets so that they can sack them without paying their employees' annual 
and long service leave, superannuation and other entitlements. This is what 
Corrigan of Patrick Stevedores tried to do when he sacked 2,000 Maritime 
Union workers in 1998.

Newly established companies then rehire workers on individual contracts or 
as casuals, shutting out unions and escaping their enterprise agreement and 
award obligations.

In the case of National Textiles it apparently continued to trade even when 
it was insolvent which is illegal, but nothing is being done by the 
Government or the Securities Commission. The whole system stinks. It is 
weighted heavily against workers and Reith has no intention of changing it.

The cosmetic changes proposed let employers off the hook, leave tax payers 
to foot the bill and leave workers thousands of dollars out of pocket.

It will even encourage companies to follow the example of Oakdale and 
National Textiles, knowing that nothing will be done to prosecute their 
robbery while the taxpayers pick up the tab.

Complete protection

When asked to comment, Peter Symon, General Secretary of the Communist 
Party told The Guardian that it is essential that workers are paid 
their full entitlements when companies go into liquidation.

"It is difficult enough losing your job, especially in areas such as the 
Hunter Valley where services have been cut back and unemployment is high, 
let alone being cheated out of your entitlements", said Mr Symon.

"The payment of wages and other entitlements is the responsibility of the 
employer, not the taxpayer", said Mr Symon.

"It is utter hypocrisy on the part of Reith to suggest he is promoting a 
social security measure when his Government is winding down social 
security. Reith's scheme amounts to corporate welfare and adds even more 
millions to the Government's pay-outs to corporations.

"There should be a Senate inquiry into these sackings so that the 
manipulations can be fully brought to the light of day and company laws 
really tightened up", he said.

ACTU Secretary-elect Greg Combet called on the Government to establish 
comprehensive protection for employees so that all accrued entitlements are 
protected against company collapse.

He specifically proposed that corporations law be amended to classify 
workers' entitlements as debts, and to increase penalties for directors who 
traded during insolvency.

The Australian Manufacturing Workers' Union (AMWU) is setting up a trust 
fund for the manufacturing industry called Manusafe.

There will be an industry-wide campaign to get employers to contribute 
entitlements to it.

The AMWU is proposing this be complemented by a national fund for all 
industries paid for by increasing the Superannuation Guarantee Charge (now 
7%) by between 0.1 and 0.3 per cent.

"This would ensure employers' compliance through the Taxation Office and 
guarantee workers would receive 100% of their entitlements", said Dave 
Oliver, Assistant National Secretary of the AMWU. Employers paying into 
trust funds would be exempted from the national fund.

This is similar to proposals put forward by Labor's industrial relations 
Shadow Minister, Arch Bevis. But Mr Bevis is seeking taxpayer contributions 
for smaller businesses with less than 20 employees.

Reforms urgent

Reforms are urgently needed. They should be based on the following 

* A company must take responsibility for the entitlements due to its 
workforce. When a company goes into liquidation or closes, workers must 
receive their full legal entitlements;

* wages and other employee entitlements must take priority over all other 
creditors (banks, taxation department) when a company goes into 

* companies and their directors, not taxpayers, have the responsibility to 
ensure workers are fully paid;

* the parent of a group of companies should have responsibility for the 
debts of other companies in its group, with strict laws preventing 
restructuring designed to avoid paying employee entitlements;

* workers' entitlements (superannuation, sick leave, holiday pay, long 
service leave, etc) should be held in trust and not be available for use by 
employers to trade with or used to pay director's salaries and perks.

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