What Do You Do After You Get F***ed?

 

The Story of Unpaid Wages – Copyright – Daily Post Nigeria

I had the opportunity to catch with one my oldest friends, after a day of looking through boxes of various old cases in the warehouse. During our catch-up session, we found that we had a number of common worries, which are rooted in the fact that we are both approaching 50, our earning power is on the slippery slope down and its unlikely that we’ll reach the stage where we’ll ever be able to look to our dependents to take care of us in old age. My friend then made the point to me that whilst things are likely to look very bleak for the rest of us, I was in the lucky position of being in an industry that is likely to do well.

This got me thinking about the prospects that I and many of my contemporaries are likely to face as economies (as the economies that people rather than statistics operate in) around the world lose the government support. In a way, I was lucky that I never “climbed” very high and thus don’t have that far to fall. I will probably struggle to survive like the masses. However, for those who have gotten onto the “Five C” ladder, things could be rather different. So, its perhaps a good time think of the awful scenario of the very real possibility of being thrown out of work.

Let’s start with the good news. If one is thrown out of work because the employer goes bankrupt, your salary is considered a “Preferential Debt.” When a company goes under, there is a pecking order as to who gets paid. The way this works is that when a company goes under, a liquidator will step in. The liquidator’s job is to “realise” what’s left of the business (collected debts and sold off whatever assets can be sold off). The first thing that gets paid is the “expenses of the liquidation” which includes the liquidator’s professional fees. After that, if there’s money left, salaries will have to be paid, followed by CPF and the various taxes. If there’s any money left after that, the “unsecured” creditors get paid.

There is, however, a cap of S$12,500 on preferential payments. So, if you’re a waiter who is owed a month’s salary, you’re in luck. Chances are your salary will be paid. However, if you’re a General Manager on S$18,000 a month, only S$12,500 will be preferred. The remaining S$5,500 will be “unsecured.” You should also be aware that only the “salary” is preferred. Leave-pay, notice-pay, medical claims and whatever allowances are not “preferred.”

To qualify for any dividend from a liquidation, you need to fill out what is called a “Proof of Debt” form in order to be counted as a creditor. It also helps to know what’s going on in the liquidation process. So, where possible, try to attend the creditor’s meeting and keep in touch with the liquidation staff, especially when the topic of their payment comes around. Scrutinize to ensure that their bills are not inflated.

You should take note that liquidation is a legal process, which inevitably means that it is time consuming. Any potential payouts are likely to happen not faster than six-months after the company goes into liquidation. Do not depend on payouts from a liquidation scenario to pay your bills.

That’s the good news in the event that you lose your job due to your employer going insolvent. As any medical practitioner will tell you:

 

 I remember one of my first Filipina colleagues in the Bistrot telling me that she was working for a boss, she had to look after the boss’s business because the boss paid her salary and needed money to pay her salary. So, she did her part to ensure that the boss had the money to pay.

The key message is that one should always be aware of what’s happening in the employer’s business for the simple reason that one’s own income is dependent on the boss’s business.

The first step is to adapt the mindset that loyalty has its limits. A good businessman is always on the look out to create greater efficiencies and more importantly cost savings. You are not exempted from that. The boss will replace you with someone cheaper or a machine that merely needs a bit of oil and can-do things at a push of a button. The process used to be limited to blue-collar manufacturing jobs. Now, in the age of Artificial Intelligence (AI) and block chain, many white-collar jobs are being replaced by machines.

This mindset protects you from the fantasy that the boss will always be there to protect you. One should always save for a rainy day and one should have a side-hustle, whether it’s a part-time job or find ways to make a hobby pay (I used to wait tables, until Covid put a dent in the restaurant business and I do encourage people to support the advertisers of this blog and I take YouGov Surveys).

The second point is that you need to be observant about the health of the business and the boss’s reaction to his or her circumstances. If the boss has an attitude thinks has the mindset that the supplier is getting “ya-ya” and expects the supplier to negotiate for lower prices to get what is due to them – you better start preparing to upscale your alternative income and ensure that your rate of sending out CVs gets higher, because chances are they’ll treat not paying your salary in the same manner if they’re pushed into it.

However, while “bad boss’s” make headlines in issues of “non-payment,” the truth is that its actually the nice guys who screw up their employees in issues of “non-payment.” Being a good person and even a good businessman does not exempt you from making bad business decisions.

One of the saddest cases I had to handle involved a construction company that hadn’t paid its workers for five months. The boss was actually a good man (took construction workers on holiday with him) and had done great things for his company (they did big projects). However, he ran into a spell of bad luck and decided to throw all his eggs into a “big-kill” project. However, the usual story of slow payments down the line happened and he couldn’t sustain it. His staff from the admin down to the workers gave their all and worked for him without pay for five months. He took personal sacrifices to do what the right thing by his workers. Sold his private property and his BMW so that the workers could get something. In the end, it still wasn’t enough and we had to move in despite his best efforts to save his business. He was put into personal bankruptcy thanks to a ruthless labor supplier and sorting out the wage bill was not funny (I broke professional rules to help a few of the guys out).

He was a good guy and his intentions were good. He was by all intents an inspiring leader (as my boss pointed out – the workers were quite happy to take photos with him despite not being paid for over five months). However, he broke the cardinal rule of business – he ran out of money.

Your bills will not stop pilling up just because your boss is running for sainthood. If your boss misses one month’s salary, it should be a sign that he or she is not going to be able to pay the month after that. Now, this is not a hard and fast rule. There are situations where the boss had a bad month and the next month proved to be significantly better. You might want to stay for another month, especially if you see your boss has sold his home to ensure that you can keep yours.

However, the reality is that businesses do go through rough patches and a good majority do not recover. Even if you decide to give two months of free work, you should leave by the third if you see that you’re not going to get paid. Your bills don’t stop just because your employer is going through a rough patch.

Ignore the rosy statistics. Governments are now pulling back support and many businesses will go under. One needs to be ready for the awful eventuality that your employer might be one of them.