Hand to mouth Axed Group Five workers turn to court for money

● Retrenched staffers at embattled construction company Group Five are living from hand to mouth because they have yet to be paid out their severance packages.

The business rescue practitioner who took over the reins of the company in March in an attempt to trade it out of financial trouble has told them there is simply no money to pay them and he does not know if, or when, there will be.

But a group of seven are challenging this in an urgent application before the labour court, claiming they are being treated unequally because those who took voluntary retrenchment were paid.

Collectively, Jose Marques, Soobramoney Pillay, Ngenani Ngubo, Msawenkosi Mhlongo, Nolan Ramsaroop, Zesha Ramrathan and Terry-Lloyd Estment say they are owed more than R1.5m in retrenchment pay and bonuses. One of the group, who did not wish to be identified, told Business Times he had worked for the company for eight years as a senior foreman and was retrenched in May.

Since then he has been living off his credit card and from handouts from his mother.

“I have a wife and three kids and a sick mom. I am running up my credit card, with no money to pay it off. If I don’t win this case, I am dead in the water,” he said.

In the urgent application lodged in the labour court against business rescue practitioners Peter van den Steen and Dave Lake, Marques, who worked as a construction manager, said they should have been paid, by law, by the end of May.

He said they were due “one week for every year worked” — the minimum by law.

“We have been advised that payment has been delayed indefinitely due to the financial circumstances of the company and the prioritisation of other creditors. But we believe there is finance available. Others, who agreed to accept amounts less than they were entitled to [half a week’s pay per year’s service] were paid out.”

The group accused the business rescue practitioners of “unilaterally deciding which creditors must be paid, and, more egregiously, which employees were entitled to be paid and which weren’t”.

In correspondence with the company, they were told: “The reality of the situation is these funds at present are not available, notwithstanding the personal hardship which you or others may be facing.”

The group raised funds to hire commercial and insolvency law expert Justin Klingbiel of Macgregor Erasmus Attorneys. He, too, asked for an explanation why some but not others had been paid.

The response was that those who had volunteered for retrenchment had been paid because they agreed to less than the statutory severance payment.

The group of seven said: “Had we remained employed by the company, they would have been obliged to continue paying our salaries. The payments were intended to cushion the blow of our retrenchment.”

Klingbiel told Business Times: “It is comThe mon cause clients are due the severance. It’s the reason for the unilateral deferment of those payments that is in issue — both at a factual and legal level.”

He said when business rescue proceedings commenced about 1,459 people were earmarked to be affected by retrenchment.

In response to questions, Bradley Workman-Davies, the attorney for the business rescue practitioners, said the application would be opposed because of the “breathing space” provided by the Companies Act — that no company under business rescue can be sued. He said Group Five could not release details of the total value of such claims.

“We are constantly seeking appropriate levels of funding so it can discharge these liabilities as soon as possible, and most of the retrenched employees appear to have accepted that the practitioners are doing as much as they can in the circumstances.”

He said though the business rescue practitioners were “acutely” aware of the financial hardship of the former employees and were “constantly seeking funding to make payment of these amounts”, they were faced with limited resources and having to balance the rights of all affected persons.

“Accelerated payments to employees of severance amounts may stress the company’s financial position further, and could jeopardise business rescue proceedings.”

Workman-Davies said payment would be made as soon as funding was available.

A business rescue plan was supposed to be published in June, but the practitioners have asked for an extension until the end of August. Should the company go into liquidation, those who have been retrenched will take preference above other creditors, except for the business rescue practitioners, who stand at the front of the queue.

‘All we want is what is owed to us by law. This should not be controversial in any way’