Mustafa Bhamji may have won the case against Global Cover Insurance, where the latter has been ordered to pay him $40,883.95 in lost wages and pay arrears, but, a year later, the man said he still hasn’t seen a cent.
In May last year, Bhamjie won the case against his ex-employer for allegedly not paying him salary because of cashflow problems, asking him to take out a loan on the company’s behalf, and dismissing him when he refused. This decision was upheld by the Employment Relations Authority (ERA) after the insurer appealed.
The reason why Bhamjie still has not been paid? It’s because the company no longer exists.
The company’s register showed that Global Cover Insurance is in the process of being struck off - that is, all its liabilities, including the money it owes Bhamjie, will be wiped out, Radio NZ reported.
Employment consultant David Collins told the publication that many financially-challenged companies close operations if an ERA decision goes against them, usually through voluntary liquidation.
Collins is supporting a case similar to Bhamjie’s. Carol Baker, was close to receiving nearly $20,000 from HRT director Peter Maynard when the company stopped trading and sold its assets even before a ruling was made.
Baker, who was assaulted and constructively dismissed by her ex-employer, spent three years chasing after the money.
She told Radio NZ: “The people who run the company, the people who benefit from the company, tend to wriggle out of their obligations by either liquidating or changing their name. It just seems so wrong.”
In another case, Collins said ERA wouldn’t hear their case because the company had gone into liquidation – “something that would happen reasonably often because there’s that loophole.”
According to employment lawyer Peter Cullen, there wasn’t much people could do in such cases.
“If you get a judgment against a company and the company goes bust then you’ve got real problems,” he told the publication.
“Sometimes you can attack the directors, although that’s going to be difficult and expensive if there’s no obvious way of holding them to blame. But if they’ve disappeared as well, then the future is gloomy I think. I can’t see that there’s much hope for someone in that situation.”
Collins said the government needed to close the loophole that’s enabling companies to dodge their payout obligations.
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