When the CFMEU argues that delaying liquidation advantages uptown toffs at the expense of workers, cooperation is the way to go.
Certainly a collaborative approach was on show last month when Pitcher Partners Andrew Yeo and Lindsay Bainbridge headed to the Supreme Court of Victoria seeking an extension of the convening periods for the second meetings of creditors of Tuftmaster Carpets Pty Ltd and Tuftex Carpets Pty Ltd (the Companies).
As is explained In the matter of Tuftmaster Carpets Pty Ltd (Admin Apptd) and Tuftex Carpets Pty Ltd (Admin Apptd) [2024] VSC 64, the CFMEU is a creditor in the administrations on the basis of “unremitted union membership fees” owed to it by former employees of the companies made redundant upon the administrators’ appointment.
While Yeo and Bainbridge have identified the potential for a better return to all creditors through a sale of the businesses as a going concern, the CFMEU wanted the companies wound up so members could access the taxpayer-funded FEG scheme and pay their union dues.
It argued that the employees, who were employed by Tuftex, would be prejudiced and financially disadvantaged by the delay in their ability to claim their entitlements under the FEG scheme if the extension was granted.
“It submits the basis on which the Administrators contend the proposed orders can reasonably be considered to be in the interests of the creditors of Tuftex, in particular, priority employee creditors, is not clear,” judge Jim Delany said.
“It submits the application and orders effectively subjugate the interests of the employee creditors to those of the secured creditors, in particular the director Karen Scott.”
But in Australia there’s more than one way to skin a taxpayer.
“What might be described as the default position under the Fair Entitlements Guarantee Act 2012 (Cth) (‘FEG Act’) is that, upon a company being wound up, employees are able to access the entitlements for which the legislation provides. Section 49 of the FEG Act provides for its extended operation in relation to employers in administration,” the judge said.
All that’s required for S 49 to take affect is for the appropriate Minister to make a declaration and the chances of Department of Employee and Workplace Relations (DEWR) Minister Tony Burke refusing to make a declaration sought by the CFMEU is nil.
Of course, Burke needs to be asked and in an affidavit Yeo filed in support of the extension application he gave an undertaking that, if the Court makes orders extending the convening period, the Administrators will within three business days make a request to the Minister that he consider whether the FEG Act should apply in relation to persons who were employed but are no longer employed by Tuftex, which was the employer company and is the tenant of the manufacturing premises.
We asked the Pitchers pair if they’d made the request and if Burke has replied but no response was forthcoming by iNO’s deadline.
The Administrators appear to be acting appropriately. The Union appears to be ignoring the fact that the Administrators act effectively on behalf of all creditors not just employees. Employee claims normal under a DOCA get priority in any event as the would in a liquidation. The FEG is representative of taxpayer money and it seems inappropriate that they ought be called upon to pay when there is alternative course potentially open.