Liquidated Aussie tech company in trouble for failing to pay staff, contravening workplace laws

The collapse of an Australian technology company has just taken a new turn after employees received a letter from a government agency.

Melbourne-based marketing and software company E-Mersion Media (Aust) Pty Ltd was forced into liquidation last month with debts of at least $13 million.

When the company went into liquidation and was finally laid off, all employees had already been laid off.

However, several employees who had already resigned before E-Mersion Media went bankrupt tried for almost a year to get their final wages and other entitlements paid.

They had referred the matter to the Fair Work Ombudsman (FWO), an independent government body specialising in industrial relations.

E-Mersion Media told news.com.au in August last year that it had withheld wages from some employees following serious allegations of misconduct, including spending $15,000 on a corporate UberEats account.

The company also announced that the police had been involved and would soon initiate legal proceedings against several former employees.

However, staff said they were not given any information about the alleged misconduct and the company was unable to provide news.com.au with a police reference number at the time, and now appears unable to provide evidence of this to the FWO either.

Last week, the FWO completed its investigation and concluded that the employees had done nothing wrong.

The government agency then stated that E-Mersion Media owed its employees wages and benefits and that labor laws had been violated.

Jeremy* was one of the E-Mersion Media employees against whom the “baseless allegations” were made.

“We note that the employer has indicated that legal proceedings are being considered but has not provided any evidence to that effect,” the FWO wrote in a letter seen by news.com.au.

“In investigating your allegations, we gathered information from various sources and found that the employer

“violated labor laws in connection with your employment,” the letter said.

These breaches included failure to pay one week’s wages, personal and carer’s leave, 433 hours of annual leave and failure to pay for work performed during the notice period.

Jeremy claims he is owed a total of $86,000.

With E-Mersion Media currently in liquidation, Jeremy must now resort to a government bailout program called the Fair Entitlements Guarantee to receive the money he is owed.

“The Fair Work process has taken a while, far too long,” Jeremy said. “It seems like they (a company) can make any allegation they want and it has to be included (in a FWO investigation).”

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Another E-Mersion Media employee, Tyson, was also confirmed in a similar letter from the FWO last week.

He is owed $103,000.

Tyson believes his resignation in June last year was viewed as “a matter of disloyalty to Judas,” adding: “I have not received a single payment since my resignation.”

Two weeks into his notice period, Tyson claims the company accused him of “serious misconduct” and suspended him without pay. He hasn’t seen a penny since.

He claims that he has not been provided with any details or information regarding the allegations.

“The next week they came back and threatened legal action,” he said, eventually hiring his own lawyer.

“I had 600 hours of vacation,” he added. “I knew I could rely on it in a year. I thought I would have a nice sum of money left over. I saved the vacation for a reason.”

Another employee, Rafael*, also told news.com.au he was suspended without pay following allegations of misconduct, but was not given further details.

“I was a little stunned,” Rafael said. “Actually, I was pretty scared.”

An internal report obtained by news.com.au, which was independently prepared after the author gained access to E-Mersion Media’s Xero accounting records in preparation for the company’s board, also confirms these claims.

The report states: “Some employees were accused of misconduct during the notice period and had their salaries withheld.

“Other employees had their salaries withheld during their notice period without explanation.”

The State Tax Office initiated liquidation proceedings against E-Mersion Media due to outstanding debts and these three employees also attempted to join the proceedings as co-creditors because they had outstanding claims.

Last month, Registrar Kim Woronzcak ordered the company to be liquidated in the Supreme Court of Victoria.

The Melbourne-based company was founded with the aim of digitizing traditional print magazines and had signed contracts with FIFA and Formula 1. The parent company had attracted investments of $12 million.

E-Mersion Media’s appointed liquidator, Mathew Gollant of restructuring firm CJG Advisory, sent a report to creditors last week.

He pointed out that the company could be saved through a Deed of Company Arrangement (DOCA), but when the FWO confirmed that several employees were entitled to benefits, the debts became too high to implement this financial arrangement.

“The Director… (had) the intention of proposing a corporate structure arrangement (DOCA) to creditors. During his appointment, it became clear to the Director that the extent of the outstanding employee claims did not allow him to make a DOCA proposal that would result in repayment to unsecured creditors,” Mr Gollant’s report said.

alex.turner-cohen@news.com.au

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