IT contractors who used the services of collapsed payroll services outfit Plutus Payroll have taken another hit after the New South Wales Supreme Court ruled they weren’t employees of the company and therefore aren’t priority creditors.
Plutus offered payroll services for free, an offer that appealed to contractors who typically pay a third party to technically employ them even though they contract to a third party. Such services see a payroll services provider pay superannuation and pay-as-you-go taxes, saving contractors from running their own affairs. But Plutus didn’t pay the tax to the ATO and it is alleged its principals pocketed it instead and used the cash to fund lavish lifestyles.
The company collapsed in May 2017 after the tax fraud allegations emerged, leaving several hundred former clients owed wages and/or superannuation payments. Liquidators have worked on the case ever since, including running a case to figure out if Plutus clients should be considered employees – who are considered priority creditors – or contractors who as unsecured creditors go down the list if and when any payments are made.
The decision by Black J applies tests from the Corporations Act to test whether Plutus clients were workers or contractors, and found that as many never worked at Plutus offices, were managed by Plutus staff, or filed annual or sick leave requests with Plutus, that they can’t be considered employees of Plutus.
The ruling doesn’t apply to all former Plutus clients, but has come as a blow to a few: the private social media group in which they gather had news of the decision and angry and/or resigned comments to the effect that their chances of ever seeing monies owed has receded even further.