Liquidators Joe Hayes and Andrew McCabe have copped a bollicking from Administrative Appeals Tribunal (AAT) senior member Chris Puplick for what might qualify as the sin of disinterest.
As is revealed in the recent decision of Tjoputra and Secretary, Attorney-General’s Department  AATA 1596 the Wexted Advisors pair didn’t inform two employees of Object Consulting Pty Ltd about their rights under the Fair Entitlements Guarantee Act (FEGA).
As a result of the circumstances of continued employment applying to these two individuals they lost entitlements to redundancy payments of approximately $32,000 and $37,000 respectively.
When the pair sought to challenge the determination in the AAT, Puplick ruefully ruled against them.
“This is a decision according to law producing a result which is both unfair and unjust,” Puplick said.
” Two dedicated, loyal, hardworking, long-term employees of a company which was placed into liquidation prior to having some of its assets sold were asked by the Liquidator to stay on to help wind-up the affairs of their company.
“One stayed on for one business day because he was the IT expert and was asked to tidy up the company’s records as well as copy and transfer files. The other stayed on for almost two weeks because he was the Finance Manager and he was asked to help finalise payrolls and entitlements for others,” Puplick said.
Because of the timing of their eventual termination and the fact that as at that time the company had morphed into a small business, the pair lost their entitlement to taxpayer-funded redundancies.
It should however be pointed out that there does not appear to be any reference to any efforts the two employees made on their own behalf to determine the status of any of their potential entitlements once Hayes and McCabe were appointed in mid-2019.
How far does the obligation on liquidators extend in respect of explaining to employees the consequences of their appointments and subsequent actions? If a competent individual doesn’t bother looking after their own interests why should that burden fall on anyone else?
Because of the operation of the FEG and Fair Work (FWA) Acts Puplick was rendered powerless to intercede and it was perhaps the frustration at being so neutered that prompted him to give McCabe and Hayes such a serve.
“The Tribunal cannot but be critical of the role of the Liquidator (Wexted Advisors) in this sorry saga,” he said.
“Wexted asked the two gentlemen to stay on as employees of the Company after it had been sold and ceased to operate. It had an option to take over their employment itself, but it chose instead to keep them on the Company’s books,” he said.
It gave them verbal notice of termination on 4 October 2019 but did not provide written notification until later dates and it asked them specifically to stay on to assist it in the finalisation of the Company’s affairs.
Wexted he said benefited from this, these employees did not, because it knew that as from 4 October 2019 the Company would morph into a small business.
“It was involved in and aware of this process,” Puplick railed.
“It knew, or at least ought to have known, that small business employer status enlivens the provisions of subsection 121(1) of the FWA and hence negated the rights which the two gentlemen might otherwise have enjoyed under section 119 of the FWA had their employment with the Company ceased on 4 October 2019 and not on later dates as a result of their agreeing to assist Wexted in the finalisation of company affairs.”
Whilst the criticisms might seem reasonable on the surface they tend to imply that liquidators should be obliged to consider the individual financial and legal circumstances of each and every employee they encounter during an appointment.
That would appear to be an onerous obligation that could open up liquidators to a degree of risk that might disincentivise IPs to take appointments. Support INO’s continued chronicling of the insolvency sector.