When a company goes bankrupt, often it's the employees who are last to find out. Picture / Getty Images
When a company goes bankrupt, often it's the employees who are last to find out.
Last month, more than 500 workers at 60-year-old western Sydney takeaway chicken chain Red Lea were sacked via email just before the Easter long weekend. While franchisees and suppliers saw it coming, many staff were left in tears at the shock announcement.
With the first creditors meeting to be held this week, former employees face an anxious wait to see whether they will receive any of their outstanding entitlements including superannuation, leave and wages.
So how can you tell if your employer is in dire straits, and what should you do to protect yourself? According to Christie Toy, employment law expert at Shine Lawyers, there are a few warning signs everyone should watch out for that "might really be evident with the benefit of hindsight".
First and most obviously, is if your pay isn't regular.
"This is [usually] the first thing to change," Toy said. "Your employer may have a pay cycle and you may not get it at the allocated time, your employer may ask to change the cycle from weekly to 10 days.
"They may often ask to go on a payment plan to pay in instalments rather than a lump sum every week or fortnight, or they may slowly fall behind. Then they may not stick to this agreement and make false promises about when you will next get paid."
And if your employer starts asking to make changes to your arrangements, that should be a red flag.
"Another common one is the employer will ask whether you would consider converting to become a subcontractor rather than an employee, or [be] paid in cash," she said.
"[That takes] the employee off the books, so they don't need to accrue your entitlements such as annual leave and sick leave, and pay payroll tax."
But they may do it anyway.
"Often your employer will stop accruing leave for you or won't pay your sick leave," she said. "You should keep track of your leave so they don't change it without your knowledge."
The really big one, however, is superannuation.
"This is probably one of the first entitlements that goes in these type of situations, the reason being it's easy for non-payment of super to go undetected and fly under the radar," she said.
"Don't be fooled by your pay slip, which is often generated by a computer system. It doesn't mean it's been paid into your account. Super can be paid up to four times a year, the annotation on a pay slip doesn't mean it has been paid.
"Employees should not assume, you should really be your own advocate on these matters and check your balance with your super provider."
A good way to check is to look at your superannuation statements and work out when your employer normally pays in, and whether there has been any change to that pattern. "Some do it four times a year, some would do it more frequently," she said.
While it's up to every individual employee to weigh up all of these factors and determine when it's time to leave, you don't want to jump ship if you don't have another job lined up.
"If you're quite confident that the business is having long-term issues, it's about managing these things as you go so you're not caught out if the business does go under," she said.
So what should you be doing right now? According to Toy, one of the most important things is to make sure you're taking your annual leave regularly.
"It's quite common for employees to hoard their annual leave, hoping that it might be a nice nest egg or a payout," she said. "But it's then lost if the business goes into liquidation."
You should also be checking your pay slip to ensure you're being paid correctly and for the hours you have worked — keep a diary and compare it if need be. If you are employed on an award, you can check your pay rate at the Fair Work Commission website.
"Be proactive in terms of knowledge of what your company's doing," she said. "Some things are reported in the media. If you're concerned, you can always set up a Google alert [about your company]."
In the event your company does go under, you may be eligible under the Australian government's Fair Entitlements Guarantee scheme to claim up to 13 weeks of unpaid wages, unpaid annual leave and long service leave, up to five weeks pay in lieu of notice and up to four weeks per full year of service of redundancy pay.
"There are some eligibility requirements," she said. "You must be an Australian citizen or holder of a permanent or special category visa. That was the issue recently with some of the Doughnut Time employees, who might not have fallen into that category."
And unfortunately, it's perfectly legal for employers to dismiss you by text message or email.
"With the advent of technology we are seeing a lot of employees dismissed by a text or email," she said. "It does seem quite impersonal in the circumstances. In terms of what the legislation requires, they need to do it in writing, so a text or email would satisfy that requirement.
"But before employers shoot off, they need to be mindful of that, employees do have access to unfair dismissal, and one of the factors the Fair Work Commission would look at is whether the employee was notified in advance of the dismissal taking effect and had the opportunity to respond.
"That's what we call procedural fairness. The concern with just sitting down and emailing or texting is it might skip that step, and the employer will find themselves in a bit of hot water."