The AWU and AMWU are taking landmark legal action against a company director personally to claim more than $2 million in entitlements for 57 members put out of work by the collapse of his Victorian company Forgecast Australia Pty Ltd.
The AWU and the AMWU are parties to the action against company director Ian Beynon, the sole director of Forgecast, and Ideal Pty Ltd, another company controlled by Beynon.
Papers lodged with the Federal Court last week claim the workers were made redundant on 26 November 2009, but were not paid entitlements due to them under AWU and AMWU agreements.
The 57 workers from the Mitcham metal forging business are owed up to $100 000 each since the company’s collapse in November 2009.
If successful, the landmark legal action will set a precedent in allowing employees’ of collapsed companies to sue company directors for unpaid entitlements.
Slater & Gordon industrial relations lawyer Marcus Clayton said the legal action was believed to be first time new workplace laws, allowing unions to sue company directors personally, had been used.
“The unions’ case is that Beynon was involved in Forgecast’s contraventions of the AWU and AMWU agreements, and the Fair Work Act (2009) provides that a person involved in such a contravention is equally liable (as a company),” Mr Clayton said.
“If successful this legal action will set a precedent for future litigation where workers have been left without their entitlements after a company has gone broke.”
AMWU National Secretary Dave Oliver said the case could be very useful for workers, but highlighted the need for a federal government scheme to guarantee workers’ entitlements in full.
“We’re calling on the government to regulate to change GEERS and to provide workers with 100 cents in the dollar.
“We have seen too many cases where workers are left with nothing but GEERS payments, which does not cover their full legal entitlements or any superannuation that an employer hasn’t passed on,” he said.
AMWU State Secretary, Steve Dargavel, highlighted the importance of union membership in protecting workers from unscrupulous directors in the case of company collapse:
“The sad truth is, it is only workers who belong to a union who have a prospect of getting their entitlements in cases like this. ASIC and the Ombuds don’t take prosecutions, so if you’re working and you want to cover your entitlements, your best bet is to belong to a union”, he said.
Mr Oliver said that company directors who may be considering ways to dodge their legal obligations to workers should think twice.
“We’ve been campaigning on this for 10 years, and we will continue to campaign to ensure that workers get the full amount of what they’re entitled to.
“Time and time again we have seen our members shortchanged while company directors continue their salubrious lifestyle.
“Employers need to be held accountable so they meet their obligations to workers instead of shifting the burden to the taxpayer. We’re taking this landmark legal action because our members at Forgecast Australia and dozens of other companies have been victims of a system that allows bosses to use corporate law to avoid paying workers what they are legally owed."
“This legal action sends a message to directors. If you turn your back on employees, we will fight you all the way."