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IT Contractors In Australia Are Not Being Paid Due To Dispute With Payroll Service (theregister.co.uk) 49

New submitter evolutionary writes: Plutus Payroll, an Australian payroll company, is refusing to pay contractors due to a dispute with companies using their services. Around 1,000 IT workers are unable to receive payment for services rendered. One may ask, "Where are the companies who actually hired the IT workers?" The Register reports: "This story starts with Australia's employment laws, which see lots of contractors officially employed by recruitment companies or payroll companies. The company at which the contractor works likes this arrangement as it means they don't have to put such people on their books. Recruitment companies and payroll companies charge for the service. Contractors generally like the convenience of having one employer even though they hop from gig to gig. The system requires fluid payments. Companies who hire contractors pay the recruiter, which either pays contractors direct or pays the payroll company contractors prefer. If the cash stops flowing, contractors get crunched. That's what's happened to around 1,000 contractors who elected to use Plutus as their paymasters: the company says it is in the midst of a completely unexplained 'dispute' that leaves it unable to pay contractors, or receive money from recruitment companies, but is still solvent. The Register has checked with the bank that Plutus clients say sends them their money -- the bank says it is aware of no dispute. One possible reason for the mess is that Plutus did not charge for its services. How it made money is therefore a mystery. Another scenario concerns the company's recent acquisition: perhaps its new owners are being denied access to some service Plutus could access as a standalone company. Plutus is saying nothing of substance about the situation. A spokesperson tells us the company deeply regrets the situation but won't divulge anything about the dispute and has offered no details about when contractors can expect resolution."
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IT Contractors In Australia Are Not Being Paid Due To Dispute With Payroll Service

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  • In other news, closer to the US, Canadian government workers are not getting paid due to a screw up in the payroll system. This has been going on for several months and isn't fixed yet:

    https://www.nytimes.com/2016/1... [nytimes.com]

    https://www.tpsgc-pwgsc.gc.ca/... [tpsgc-pwgsc.gc.ca]

    • by Destoo ( 530123 )

      What is epic is that the EXACT SAME STORY happened to Australia's Health workers.
      IBM Makes a payment system.
      System is delivered on time, so public service managers get their bonuses.
      Workers are not getting paid.
      Government sues IBM.
      IBM wins lawsuit, plus legal fees, because it followed the specifications in the contract.

      http://www.theaustralian.com.a... [theaustralian.com.au]
      "the government was not able to define and stick to a scope”
      This is what's happening at the Canadian Government right now too. IBM made a "perfect" syst

  • by __aaclcg7560 ( 824291 ) on Wednesday May 03, 2017 @06:55PM (#54351373)
    After I was out of work for two years (2009-2010) and filed for Chapter Seven bankruptcy in 2011, I spent the next two years working multiple assignments from three different contracting agencies. All three used ADP for payroll. I would've been screwed if ADP threw a fit.
  • by rudy_wayne ( 414635 ) on Wednesday May 03, 2017 @07:01PM (#54351389)

    the company says it is in the midst of a completely unexplained 'dispute'

    the bank says it is aware of no dispute.

    Plutus did not charge for its services. How it made money is therefore a mystery.

    Plutus is saying nothing of substance about the situation.

    Slashdot: no information required.

    • Indeed. When a company says "Hey, I'll be your middle man and handle all your payments for you, for ABSOLUTELY FREE!!!!" one should run, not walk, from that company.

      And how would the company's bank know anything? It's not like banks generally look at a depositor's balance sheet unless the company's looking for a loan.

      It looks to me like some foolish and greedy people were taken in by a scam.

      • If the supposed dispute had resulted in frozen assets, disputed transactions, or other explicitly financial disagreements, then the bank would almost certainly know of it.

        Whether they would discuss that with a nosy journalist is a completely different question.

        Still, my gut reaction is that if there's a genuine dispute, it's probably a matter of one executive demanding that another give back the money they stole from the till.

      • for ABSOLUTELY FREE!!!!

        They don't do it for free. Why do you think there's a commercial dispute. There's a lot of these payroll companies out there, many international. All of them handle the final person's claim "absolutely free". The costs are covered upstream.

      • It looks to me like some foolish and greedy people were taken in by a scam.

        That's because you are using imagination rather than experience. I contracted under a similar system for 12yrs in Australia (95-07), good money, no problems with payments. Here in Oz. large corporates rarely employ an individual contractor who is not represented by an agency. Most agencies are relatively small operations and use payroll companies to handle the payments. Basically, if you want to be an independent contractor in Oz you need these services to get your foot in the door. I only gave up contracti

    • I'd be suspecting that their business model depends on short-term investments. i.e.: they receive weekly or fortnightly payments from the recruiting companies and use at least the superannuation portion of that on short-term money markets until they do the deposits into the superannuation accounts at the end of the month. This is much like banks do with cheques while they're "processing payments" for 3-7 days in our modern, instant transfers, electronic payments society.
      • I worked under such a scheme a number of years ago. The recruitment agency that were hiring me for a role didn't do their own payroll, rather I was employed by a third party.

        So small time recruiters probably pay these guys a fee for each contract. For workers that use their services directly, they can charge 0%, using the methods you describe.

        Bear in mind taxation - where money collected at the beginning of a financial year might only be required to be submitted to the federal government 11 months later at

      • by _merlin ( 160982 )

        Yeah, that would make sense, and I'd have expected it to work that way 20 years ago. But remember the gig economy and the sharing economy, and the rest of the buzzwords have changed that. Now you're supposed to start a business without a revenue stream, build up a customer base, then get acquired and let the new owner worry about how to actually turn a profit.

  • In the US if you refuse to pay regular employees, the Feds come sniffing around looking to charge you with fraud and other nasty things... Contractors can be out of luck, but even they have fairly decent legal recourse that 95% of the time comes out in their favor in court and usually awards them legal costs and punitive damages for bad faith behavior, especially if they have a reasonable contract.

    After going through this once as a contractor, I now insist on weekly paychecks, with no more than a 7 day del

    • In Norway, if you end up like this, there are worse things than merely not paying. Its getting a union the attention of this, because the Union has access to the legal legs needed to manpower such cases trough court, usually ending in trainwrecks if laws are broken. And if no payment for wages is made, they are broken badly.

      The most likely cases for Australia is that the 1000 employs are not organized in a proper Union, so when the payment stops, it doesn't end in court within days. And if thats the case, s

    • It's not that onerous in Australia. No need for courts. The government provides people to fight these good fights for you. One guy I knew was owed $12000 in back pay, after 4 weeks of arguing with the employer (yeah he left that too long) he called Fair Work Australia and a week later was paid in full and the company subsequently fined.

      This shouldn't be a problem as long as the company is liquid.

    • Contractors can be out of luck

      The victims in the article are classified as sub-contractors in Oz. The scenario in TFA is unusual. I did it for 12yrs, good money, no complaints.

  • They claim to be solvent. how the fuck is a company that is not paying its obligations is solvent? is the company saying that it is not indebted to the people they were supposed to be paying already? in that case, the contractors are fucked. and should get the company bankrupted.

    if the company was actually doing it's service for free(taking no extra fee for providing the service, mind you) then it would be pretty probable that someone, the new owners perhaps, took out the money they were supposed to be payi

    • by Shimbo ( 100005 )

      If I had to wager though, what happened is that they blew contract renewal with their IT contractor and they are unable to know who they are supposed to pay and what.

      FWIW: my guess is the now the previous owners have taken the money and gone, there is nobody left to run the business. New owners have decided its cheaper to go legal on them rather than hire them back as consultants.

      • I saw something like this happen at/to a large company in the US many years ago. They had a number of engineers in on contract through one particular contracting firm. GD/FW was paying the contracting firm, in full and on schedule, but the engineer paychecks were bouncing. One guy I heard about flew up to the contracting firm's bank's home office, and presented the check in person, so that the bank would have no choice but to tell him why they refused to pay a valid check drawn against them.

        It turned out

    • Free is actually a nebulous term, I often tell telemarketers I can't afford free. Sometimes free means no out of pocket expense, I suspect that the contracting firms are paying Plutus a processing fee and Plutus is also playing the float; and is just a baby-step away from being a check kiting Ponzi scheme.

  • It's been a few years, but my last experience in contracting like this was that the recruiter MADE themselves non-optional. In order to access the recruitment service (primarily to reduce the time invested in screening applicants), companies have to agree to make the payments to the recruiter. Advertisements for positions are made by the recruiter and don't include details of who the actual company is, until after you're under contract.

    Additionally, companies and contractors are in breach of contract if the

    • It hasn't been optional even if it wasn't mandatory. I knew someone who tried handling their contractor affairs by themselves. Man did they get royally screwed when the tax man questioned their filing.

      Sometimes paying a middle man actually creates value for all involved. ... except the taxman.

  • This is highlighting a bit of a problem with putting employees at arms length to provide a legal fiction to dodge tax and other obligations - you have to be able to trust everyone else in the chain you are using to attempt to fool others.
    These middlemen exist really due to the deliberate complications of pretending an employee is not an employee where it's far more efficient to handle such deception in bulk.
    It's far less complicated with real contractors and it's far more effective to contract them directly

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