Foreign cleaners miss payouts in Swan collapse
Swan Services collapsed last week and is likely to be liquidated. It owes $1.6 million to its 2466 employees for wages alone. Its workers were said to earn $17 an hour cleaning shopping centres and $21 an hour in office buildings.
Many have found work with different contractors, but Michael Crosby, president of the United Voice union, said they were owed two weeks' pay, leave and leave loading, and superannuation from March onwards.
Swan Services owes a further $2.7 million to creditors such as cleaning product suppliers. The bill for government creditors, primarily the Tax Office, is yet to be determined.
Administrator Anthony Elkerton, from Pitcher Partners, said the employee entitlements comprised an "unusually high percentage" of Swan's debt, reflecting the labour intensity of the cleaning industry.
He estimated that only 30-35 per cent of Swan's workers would be eligible for the Fair Entitlements Guarantee, a taxpayer-funded scheme that covers unpaid wages, annual leave and redundancy entitlements of workers whose employer has gone bankrupt or into liquidation until money can be retrieved by insolvency.
Only Australian citizens or holders of a permanent visa or a special category visa are eligible for the scheme. Mr Elkerton said it was "too early to predict a return to creditors".
The collapse of the 47-year-old business has been blamed on unprofitable contracts, a computer glitch and a delay in receiving payments worth an estimated $2.5 million from customers. Mr Elkerton said the payment of any employee entitlements would "rely heavily on debtor collection rather than asset sales".
The comments come as economists tip a rise in the national unemployment rate to 6 per cent by the end of 2013, and as the cost of the Fair Entitlements Guarantee is budgeted to cost $304 million this financial year.
Employment and Workplace Relations Minister Bill Shorten said the guarantee scheme, formerly known as GEERS when introduced by then workplace minister Tony Abbott, put the government in workers' shoes.
Mr Shorten told Fairfax Media last week the government "would like to see more recoveries".
"Clearly we view recovery as an important part of GEERS. We'd like to see that number increase; we'd like to have better-run companies," he said.
Asked whether there was evidence that companies were increasingly collapsing with little money for entitlements knowing the taxpayer would pick up the tab, he said: "No, I talk on a regular basis to insolvency practitioners, and I've had no advice to that effect from the department either."
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Swan Services, a 47‑year‑old cleaning business, collapsed after a mix of unprofitable contracts, a computer glitch and delays in receiving customer payments (about $2.5 million). Administrators say these cashflow and operational problems left the company insolvent and likely to be liquidated.
Administrators reported Swan owed about $1.6 million in wages to 2,466 employees. It also owed roughly $2.7 million to trade creditors such as cleaning product suppliers, while the bill to government creditors (including the Tax Office) was still to be determined.
Administrators warned thousands of low‑paid foreign workers are likely to miss out on unpaid entitlements because they don’t meet eligibility rules for the government scheme. Union officials also said many workers were owed two weeks' pay, leave, leave loading and superannuation from March onward.
The Fair Entitlements Guarantee (formerly GEERS) is a taxpayer‑funded scheme that covers unpaid wages, annual leave and certain redundancy entitlements for employees whose employer has gone bankrupt or into liquidation. Only Australian citizens, permanent visa holders or holders of a special category visa are eligible for FEG payments.
Administrator Anthony Elkerton from Pitcher Partners estimated that only about 30–35% of Swan's workers would be eligible for FEG, because eligibility depends on citizenship or visa status.
Administrators said payment of any employee entitlements will depend heavily on debtor collections (money recovered from customers) rather than asset sales, and it was "too early to predict a return to creditors." The outcome will hinge on how much can be collected from Swan’s outstanding receivables.
Union president Michael Crosby highlighted workers' unpaid wages and entitlements, while Employment Minister Bill Shorten said the guarantee scheme puts the government in workers' shoes and that the government would like to see more recoveries and better‑run companies. Shorten also said there was no evidence companies were collapsing deliberately to rely on the taxpayer.
The article noted economists were tipping national unemployment could rise to about 6% by the end of 2013, and that the Fair Entitlements Guarantee was budgeted to cost around $304 million in the current financial year — highlighting potential broader pressure on the labour market and public finances.
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