The ‘tech wreck’ sweeping through the technology sector has hit an Australian dad not once, but twice.
A 42-year-old father-of-two has been made redundant two times in the past six months as the IT meltdown continues to wreak havoc.
Rafael*, who preferred to remain anonymous, lost his job in August last year after his company collapsed.
Within a few days the IT worker had found a new gig, but he was cut again in January, just a week before he passed probation.
“Salaries are high, margins are tight. Unless you’re a really big company it’s difficult to sustain in this industry,” Rafael told news.com.au.
The Perth resident is owed a whopping $15,000 in unpaid superannuation from the tech outfit that went into liquidation year, called Diverse Services (WA) Pty Ltd.
Rafael had worked at Diverse Services for three years, which managed IT functions for a range of Perth clients including not-for-profits, medical companies and mining corporations.
At its peak, the company had 40 employees, Rafael said.
However, everything started coming apart at the seams and on June 9 last year, the company went into administration.
David Hurt and Jimmy Trpcevski, of Jirsch Sutherland, acted as the administrators and two months later, the embattled firm went into liquidation.
By this point only about 10 staff remained at Diverse Services, who were all called into a room and made redundant on the spot.
According to a statutory report filed to the corporate regulator in November, obtained by news.com.au, Diverse Services owes $3.918 million to unsecured creditors.
Of that, its workers are owed $486,000.
Staff are owed $400,000 in unpaid superannuation – $16,000 of which has been added onto the original amount in interest.
A further $41,100 is owed in unpaid annual leave, $22,700 is owed for payment in lieu of notice, $20,000 for long service leave and $1500 for an excluded employee payout.
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Rafael recalled receiving “spits and spurts” of superannuation in his account while he worked at Diverse Services. “It was only the last year it became a problem,” he said.
“I know a lot of the guys complaining about the super. Everyone else quit because they weren’t getting super.”
By the time Diverse Services was wound up, the workforce had shrunk and less than a dozen employees remained, he said.
“If less people had quit we wouldn’t have missed out on redundancy. It is what it is,” Rafael said, adding that he was one of the few who stayed until “the bitter end”.
Another staff member, Dylan*, has also been left angry over the debacle as he is owed $5000 in superannuation but doesn’t expect to ever see that money again.
“They had a large turnover,” he said. “There was a lot of work, we were quite busy, and then people started to leave.”
The original 40 staff shrank to nine. “We all kind of started to look for jobs,” he explained. “By that stage when you’re getting that low, we knew that something was not right.”
Dylan started working at the company in 2021 and claims he wasn’t paid superannuation at all, until the administrators took over.
In mid-2022, Dylan recalled that employees were submitting their tax when one of them stumbled across their super account and realised nothing had been paid for some time and it soon spread among staff. From there, people started quitting.
The federal government has in place a scheme called the Fair Entitlements Guarantee which pays back workers unpaid leave and other entitlements from a last resort fund if a company collapses.
At least 10 Diverse Services employees applied to this, according to the liquidators.
However, the same protections aren’t in place for unpaid superannuation contributions, which is bad news for Rafael and Jason.
Both men have lodged a complaint with the ATO, which is meant to be in charge of recovering unpaid super funds, but they have heard nothing back yet.
“It’s really frustrating. All we want is an answer,” Rafael said.
The liquidators have warned unsecured creditors that there is a very low chance of a dividend.
The directors of Diverse Services blamed its collapse on the Covid-19 pandemic, a view that the liquidators agreed with.
“The Company has faced difficulties in delivering its services due to the Covid-19 pandemic causing delays in stock, staff retention and costs,” the liquidation report stated.
Dylan knew there was a problem to retain and attract talent, estimating that the firm racked up hundreds of thousands of dollars in recruitment debt to try to replace roles.
“It just became really difficult to recruit,” Rafael agreed. “(It was) not sustainable to bring people in when the recruiters were charging $20,000 to $30,000” per new staff member.
News of the company’s administration “went through Perth like lightning”, Rafael added, which led to all their clients pulling out and leaving them with a business that could no longer function.
The liquidators have estimated that the company has assets worth $763,571.
An interested party offered $500 to the liquidators buy a website domain from Diverse Services, but it’s understood this offer was turned down.
Tech sector in meltdown
In the past six months, Australia’s tech industry has been caught in the throes of a crisis as investors have been left spooked by dramatic plunges in valuations making funding harder to find.
The current market conditions has seen many companies, big and small alike, cut jobs or go under as they struggle to stay afloat in the turbulent market.
A number of big name start-ups such as Deliveroo, Metigy and Volt Bank have also collapsed.
In August, news.com.au reported on a governance and risk management tech firm called FirmGuard which went bust owing $2.3 million to creditors.
In the months leading up to its demise, a worker was not paid and the company’s CEO started paying staff through his own personal bank account.
Later that same month, an Aussie quit his job of six years to work at a tech start-up called Zenbly but he was devastated to learn there was no job for him to go to as the new firm had been liquidated.
He was unable to return to his old job because he had already worked out his notice and found himself unemployed while a new baby was on the way.
In July, news.com.au raised questions about another Sydney-based tech firm, D365 Group, which builds software for health, real estate and accounting services.
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Staff claim they haven’t been paid superannuation for months.
alex.turner-cohen@news.com.au
* Not their real names
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