How to Lessen the Pain?

 

The big news in the world of local eat outs is that the home-grown chain, “Twelve Cupcakes” has been placed under liquidation.

https://www.straitstimes.com/business/companies-markets/twelve-cupcakes-ceases-operations-after-being-placed-under-provisional-liquidation

 

 No reason was given as to the cause of the liquidation. The media reports describe it as “sudden and abrupt” and as with all liquidation scenarios, the workers got screwed. Neither workers nor their unions had any idea about the sacking – the workers got the news via a WhatsApp message. It goes without saying that the Ministry of Manpower has had to announce that it is investigating the matter and whether the company was in breach of the Employment Act.

https://www.channelnewsasia.com/singapore/twelve-cupcakes-closure-worker-salaries-mom-cpf-investigating-5438191

 

The former staff have now taken social media to talk about their situation and its frankly heartbreaking to read about how people gave their blood, sweat and tears and then didn’t get paid. Wages unpaid means that people can’t pay bills, which means their financial situation gets screwed up.

 

So, with Singapore undoubtedly going to face harsher economic headwinds and more companies expected to go under, what does it mean for people looking facing possible job loss?

For a start, you got accept that “job-security” is something of a misnomer. However much employers will talk about “looking after you,” you have to accept that allot of the “promise” depends on the employer’s ability to actually pay. Even the most well meaning of bosses cannot pay wages if the business is simply not making money. When I waited tables at the Bistrot, I was clear that the business belonged to the boss who owed me a wage for work but I had a sense of responsibility to ensure that the boss’s business did well enough to be able to pay me. If you notice that the business is not selling stuff, you better start your job hunt.

Secondly, the “rules” between employee and employer change in a liquidation scenario. Whilst its nice to see the Ministry of Manpower (MOM) galvanized into “investigating” for any breaches of the “Employment Act,” there’s actually very little if anything that will happen. The fact of the matter is, the company is in liquidation, which means that there is no money. When it comes to getting money out of the what’s left of the Company, MOM will call up the liquidator for an update on the liquidation and ask if there’s any money to be paid out and if possible, when will the money be paid out. In this scenario, MOM’s powers are more symbolic in as much as the liquidator may feel obliged to work a bit faster knowing there’s a government agency watching.

Having said that, the case of pursuing wages is not all lost. Liquidators are obliged to try and claw back money. The laws on insolvency state that employee’s salary claims are a priority, right after the expenses of the liquidation. So, once the liquidator pays off his or her expenses, they will then turn to settling salary claims. One should take note that this specifically pertains to salary claims. Things like leave pay, notice pay, medical claims and so on come later. If you get say 80 percent of your pay, you’re considered very lucky.

How do you go about making your claim? The answer is in filling out that is called a POD or Proof of Debt. This form is where you outline what you claiming the company owes you. Since the onus is on the debtor to prove their debt, you need to attach things like your pay slips, employment contract and anything else that shows you were an employee and didn’t get paid. The POD for a creditors’ voluntary winding up (case where the company is digging a bigger hole by continuing business) looks something like this:

 

The second aspect of a liquidation is a creditors’ meeting. In the case of a creditors winding up, the provisional liquidator is obliged to get his or her appointment approved by creditors at a creditors meeting. This meeting should take place after a month of being in provisional liquidation and in the post-Covid world, chances are this meeting will take place over Zoom.

The meeting will not give you money. However, its worth attending in as much as it will give you an idea of what happened and you can assess the likilood of getting paid or when you’re likely to get paid. In that respect, the most important document is the Statement of Affairs or SOA, which in the case of a voluntary winding up looks something like this:

 

 The SOA is signed by the director under oath and outlines what is collectable and who is owed what. Both SOA and POD samples can be found at the Ministry of Law’s site at:

https://io.mlaw.gov.sg/files/Forms%20-%20IRD%20(Voluntary%20Winding%20Up)%20Reg%202020.pdf

 

The forms should also be provided to you by the liquidator when they send out the notice of the creditors’ meeting. You should also check the Government Gazette and the Business Times section for notices of creditor meetings and if there’s a dividend to be paid out.

Liquidation for an employee is a distressing experience. However, whilst things may look bleak, its still worth putting in a claim to improve your chances of getting something out of a bleak situation. This is also the time when most employees fall a part (a case of every man for him or herself). However, this is when employees actually need to be most united, sharing knowledge of the liquidation scenario.