“The situation is not favourable for former employees of Genesis Global” says Dr Andrew Borg Cardona
In an interview with SiGMA News, employment legal expert Dr Andrew Borg Cardona says that negotiations to seek compensation for unpaid salaries, bonuses and holiday entitlement will be tough for employees of insolvent company Genesis Global Limited.
LH: I wanted to start by asking you for some practical information about compensation to Genesis Global former employees for loss of income.
Dr Andrew Borg Cardona: “Insofar as the likelihood that former employees of Genesis Global would be compensated, this depends on the financial status of the company. At this time, there is little information available on the public domain but it appears that the directors have filed for insolvent liquidation and the employees will have to line up with other creditors. Wages (up to a certain amount) rank quite high in the order of repayment IF there are any funds available to the liquidator who will be appointed by the Court. The procedure will not be quick. The hearing in court is on 22 February. Employees should ask their lawyer to take note of this date.”
LH: Can we focus on the money question. Until about eight weeks ago, it seems former employees were not aware of the pending insolvency and did not have a contingency plan to pay their loans and other commitments. Would you explain if they are on the right track?
Dr Andrew Borg Cardona: The employees have done the right thing by going to the Department of Industrial and Employment Relations (DIER) and, from what I have read, engaging a lawyer but they have to understand that the situation is not favourable to them. Depending on the circumstances, they might be able to recover from local assets and – this is a long shot – seek to exercise their rights against the ultimate business owner, if this is feasible, but it would be extremely difficult to go this way.
LH: The team of former employees are committed to seek compensation as a group represented by one lawyer. In your opinion do they have any other rights?
Dr Andrew Borg Cardona: They should also seek information in connection with their rights under the Guarantee Fund Regulations, which is a fund that is government-administered and is meant to help employees in these circumstances.
LH: What are the obligations, if any, of the insolvent company to their former employees?
Dr Andrew Borg Cardona: Apart from what I pointed out, the company, clearly, still owes the wages, but once it is in liquidation, the procedure must be followed to establish the extent of the assets and liquidate them and the employees being paid accordingly.
LH: There were allegedly enough funds before insolvency to pay wages. What is the employees’ position in this instance?
Dr Andrew Borg Cardona: Once the company is in liquidation, this makes no difference, the procedure still has to be followed.
LH: The group of former employees claim that the company was advertising to employ staff to fill new positions a few weeks before it was declared insolvent. What is the code of ethics of an employer in such instances?
Dr Andrew Borg Cardona: There is no such code of ethics. You must be joking!
LH: Employees of Genesis Bluebird in Poland have also filed a complaint with the Malta Department of Industrial and Employment Relations. What are the rights of the employees in Poland to claim for compensation in Malta?
Dr Andrew Borg Cardona: The Malta Department of Industrial and Employment Relations (DIER) has the power to protect employee rights in Malta. If the Polish employees of Genesis Bluebird were employed by the Malta company, they have the same rights as those employed in Malta.
LH: What is the role of the Malta Department of Industrial and Employment Relations (DIER) ? How will it handle complaints for compensation?
Dr Andrew Borg Cardona: The Malta Department of Industrial and Employment Relations (DIER) is supposed to protect employee rights that include circumstances like this. It’s role is to guide and advise the employees on their rights. In reality, if there are no funds in the insolvent company and no responsible persons or directors living in Malta, there is little DIER would be able to do if the directors of the business live abroad and simply ignore them.
LH: Are the directors of the insolvent company liable to settle unpaid wages if they have assets and are living in Malta? What about directors who may be resident abroad?
Dr Andrew Borg Cardona: Under insolvency law, for directors to be found liable personally, they have to be adjudicated by the court in due course. Under employment law, the DIER might also be able to take action against the directors personally provided they can find them to serve them the documents. With regards to directors of the company living abroad, the DIER could resort to international procedures, but in reality…?
LH: Would the CEO and management of Genesis Global be liable at all?
Dr Andrew Borg Cardona: This depends on the nature of the employment of the CEO. Technically, under employment law a manager has liability, but it depends on whether the CEO was able to control the way funds were used for there to be liability. The employees’ lawyer would be able to assess this better, of course, but it is not very likely that there would be much success going down this route.
LH: What advice would you give the former employees of this company?
Dr Andrew Borg Cardona: Get a lawyer, which they have done.
LH: Are there any precautions that employees can take to safeguard their employment in similar case scenarios?
Dr Andrew Borg Cardona: Not very much one can do, unfortunately!
Dr Andrew Borg Cardona specialises in labour and employment law. He represents clients in negotiations, conciliation and arbitration proceedings. He advises corporates on the impact of legislation on their operational structures. He is also a specialist in financial services, contract and company work with connected litigation. Dr Borg-Cardona is a member of the MdR Fraud Network coordinated by the London firm Mischon de Reya.
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