Workers lose pay as disability support provider collapses | 7.30

Key Concepts

• NDIS (National Disability Insurance Scheme): Australia’s scheme to support people with disability.
• United Employment/United Foundation: Labour hire and not-for-profit organisations providing disability support services.
• Superannuation: Australia’s retirement savings scheme, legally required contributions from employers.
• Entitlements: Accumulated leave (annual, sick), unpaid wages, and superannuation contributions owed to employees.
• Administration/Liquidation: Processes for companies unable to pay debts, involving an administrator managing assets and debts, potentially leading to liquidation.
• Fair Work Ombudsman: Australian government agency responsible for workplace relations and ensuring compliance with workplace laws.

Financial Hardship & Exploitation of Disability Support Workers: The Collapse of United Employment

This report details the financial hardship and alleged exploitation experienced by disability support workers following the collapse of United Employment, a New South Wales Central Coast-based labour hire provider operating within the National Disability Insurance Scheme (NDIS). The situation highlights systemic issues within the disability support sector regarding worker protections and compliance with employment laws.

The Situation at United Employment

Stephanie Schubert, a 28-year-old disability carer and nail artist, exemplifies the impact of United Employment’s failure. For three years, she provided direct care – showering, cleaning, pad changes, cooking, shopping – to individuals in supported living homes. In June, staff received an email informing them United Employment had entered administration. Workers were offered new contracts with United Foundation, a not-for-profit, but these contracts came with significant losses. Schubert, a permanent part-time employee, was offered a casual position with the loss of 136 hours of accrued leave. She refused the offer.

Schubert alleges significant financial losses, estimating over $10,000 in unpaid superannuation, tax, and leave entitlements, as well as two weeks of unpaid wages. Her experience is not isolated.

Scale of the Problem & Union Response

The Australian Services Union (ASU) reports that approximately 50 former United Employment staff on the Central Coast are affected. The ASU estimates a total of $6 million in worker entitlements is missing. Workers report being pressured to sign new contracts with United Foundation under threat of non-payment, with some receiving only a “complimentary payment” upon signing. Nathan Seum, a senior support worker, signed a new contract within 48 hours of the company’s collapse, fearing financial ruin, and received a consideration payment for doing so.

Workers express feelings of betrayal and insecurity, stating, “security that was all taken from me” and “Work his ass off for that.”

Company Response & Administrator Findings

United Employment claims the rapid contract turnaround was necessary to ensure continuity of services for participants and income for staff. The company asserts it is unaware of any outstanding wages and that all salaries were paid on time. However, an administrator’s report revealed United Employment owed employees over $6 million in wages, superannuation, and other entitlements, and also failed to pay the Australian Tax Office over $5 million. The company is now in liquidation.

Regulatory Oversight & Increasing Complaints

Fiona McDonald, an academic who has extensively interviewed disability workers, describes the sector as “fragmented,” “not well-regulated,” and “driven on price” with many “inexperienced operators.” She highlights the vulnerability of workers who often work in isolation, with limited supervision and peer support.

Complaints to the Fair Work Ombudsman regarding unpaid wages and superannuation have dramatically increased in the past five years. In the last financial year, the Ombudsman received 75,000 inquiries, recovering over $68 million for workers – a 40% increase in inquiries and a 48% increase in anonymous reports. Anna Booth, the Fair Work Ombudsman, confirmed an investigation into the outstanding entitlements owed to former United Employment workers and a broader standalone inquiry into the disability sector, currently investigating over 100 disability support service providers.

Personal Impact & Systemic Concerns

Nathan Seum, after two months with United Foundation, left due to ongoing issues with unpaid entitlements. He expresses disillusionment, stating, “I got into disability mainly because of the money…but I didn’t realize I’d love it so much…But it’s got to a point where, you know, the companies do not care. They claim they do, but they don’t.”

This sentiment underscores a broader concern about the prioritisation of profit over the wellbeing of both workers and clients within the NDIS system. The case highlights the need for stronger regulation, improved enforcement of employment laws, and greater protection for vulnerable workers in the disability support sector.

Technical Terms Explained

• Superannuation: A compulsory contribution made by employers to a fund for employees’ retirement. It’s a percentage of an employee’s earnings.
• Administration: A legal process where a company unable to pay its debts is placed under the control of an administrator who attempts to restructure the company or sell its assets to repay creditors.
• Liquidation: The process of winding up a company and selling its assets to pay off debts. It signifies the end of the company’s operations.
• Entitlements: The total amount of money owed to an employee upon termination of employment, including accrued annual leave, long service leave, and unpaid wages.

Conclusion

The collapse of United Employment serves as a stark warning about the vulnerabilities within the disability support sector. The case demonstrates the potential for significant financial harm to workers when companies fail to meet their legal obligations. The Fair Work Ombudsman’s ongoing investigations and broader inquiry are crucial steps towards addressing systemic issues and ensuring fairer treatment and greater security for disability support workers. The situation underscores the need for increased oversight, robust enforcement of employment laws, and a fundamental shift in prioritisation towards the wellbeing of both workers and the people they support.