Axed workers owed wages left in lurch

The Government is refusing to underwrite redundancy and holiday leave entitlements for workers of companies that fall into receivership or liquidation.

The National Distribution Union has called for an overhaul of New Zealand's receivership law after some redundant Lane Walker Rudkin staff found they were unlikely to see their full entitlements.

Legally, employees of companies that go into receivership or liquidation are entitled to be paid before the Inland Revenue and other secured creditors, but to a limit of $16,420.

To get entitlements above that they would have to line up with other unsecured creditors.

NDU southern secretary Paul Watson said a reasonable number of the 186 LWR workers made redundant in May were entitled to more than the legislated cap. Some had entitlements of more than $50,000.

LWR receivers Stephen Tubbs and Brian Mayo-Smith, of BDO Spicers, have indicated there would be no money for unsecured creditors.

Watson said last week the restriction was locking out hard- earned legitimate entitlements.

He believed there was an urgent need for the Government to underwrite redundancy and leave entitlements, as in Britain and Australia.

However, Commerce Minister Simon Power said the Government had no such plans.

The cap provided the opportunity for people to get by until they found new jobs, he said, adding that he was satisfied the current entitlement achieved that objective.

It has taken two months for LWR workers to receive 55 per cent of their entitlements, because when receivers took over, the company did not have the cash reserves available to make payouts to staff.

"It is never fair when a person, whether it is an employee or any other creditor, is out of pocket.

"However, one must recognise that in an insolvency scenario, there is inevitably not enough money to pay all the creditors their pre-insolvency entitlements. If one group gets more, another group gets less," Power said.

NDU president Robert Reid said the recession was leading to a rash of redundancies, once again highlighting the issue which had previously been raised to no avail.

The NDU would make a formal presentation to the Government on the issue in the coming weeks, he said.

- © Fairfax NZ News