Drivetrain Systems International, an Albury-Wodonga based gearbox maker went into receivership yesterday putting half its workforce at risk of lost entitlements.

400 workers were told reduced demand and global downturn was the cause, and were told to go home without pay. As many as 200 redundancies are likely as reshuffling and attempts to find a new buyer begin.

Assistant Secretary of the AMWU Vehicle Division, Dave Smith, said the workers were devastated to hear that they had lost their entitlements.

“The news of the receivership didn’t come as a complete shock. We knew there were problems, but we didn’t know their entitlements weren’t secure.

“Some workers have up to 30 years service and about $5 million is owed to workers in entitlements.”

The situation brought renewed calls for a universal entitlements protection scheme that pays one hundred cents in the dollar of entitlements owed to workers at the time of redundancy.

AMWU National Secretary Dave Oliver said that redundancy, annual leave, long service leave and superannuation payments are often treated as unsecured, interest-free loans by employers – to the detriment and financial loss of their employees.

“Many loyal workers who have been at companies for up to 20 years in some cases will have substantial redundancy or leave payments accrued.

“But if the company goes bust, employees have no guarantee that they will receive their entitlements in the rush to pay creditors and banks as priority.

“Employees often use their entitlements to survive whilst looking for new work, to feed the family or cover the mortgage payments in the period immediately after losing their job.

“Workers should not be forced to bear the brunt of the global financial crisis, which is why the AMWU last year proposed a new system of income protection that guarantees 100% of accumulated employee entitlements.

A universal employee entitlements protection system could involve:

• A universal insurance scheme to cover employee entitlements, to be developed and managed nationally or industry-by-industry.
• A pay as you go contribution plan like those used in building/construction industries.
• Legislation that ranks employee entitlements above secured creditors.

“Workers are vulnerable in these difficult times, and in cases where they lose their jobs, they should have full access to their entitlements,” said Mr Oliver.