Carpet firm exploits IR laws to cut entitlements

13 Nov '06

4 min read

The Australian Council of Trade Unions (ACTU) is disappointed the Federal Government has failed to close a loophole in the IR laws that is allowing carpet manufacturer Godfrey Hirst to takeover the operations of its former competitor Feltex carpets while substantially cutting redundancy pay and other entitlements for 320 Australian production workers.

The Government announced new changes to the IR laws, but has failed to provide protection for the pay and conditions of employees following the sale of a business to a new owner says the ACTU. ACTU Secretary Greg Combet met with Feltex workers at its West Footscray plant today ahead of a dispute between carpet maker Godfrey Hirst and the unions over redundancy pay for Feltex workers resuming before the Australian Industrial Relations Commission (AIRC) at (Monday).

It has also been revealed that the Geelong-based Godfrey Hirst found the money for a corporate marquee and sponsorship of race nine at Flemington - the Redbook Carpets Plate - on Melbourne Cup day at the same time it was demanding Feltex workers sign new job contracts that erode their pay and entitlements.

ACTU Secretary Greg Combet said: "The Federal Govt promised that under its IR laws workers' pay and conditions would be protected for 12 months following the transmission of a business to a new owner.

But carpet maker Godfrey Hirst has joined the list of an increasing number of employers using the new laws to cut workers' conditions when they takeover an existing business.

Godfrey Hirst is reported to be spending $120 million to take over Feltex's operations with 500 employees in Australia and 800 in New Zealand. It could soon control up to 80% of the Australian carpet market.

"How can this company justify spending hundreds of thousands of dollars for a corporate marquee and to sponsor a race at the Melbourne Cup while at the same time saying it isn't able to honour the existing pay and conditions of Feltex workers? This is legally dubious and morally outrageous," said Mr Combet.

The situation of the Feltex workers is another example of a major loophole in the IR laws that enables companies to transfer ownership or restructure into a new entity and evade the 'transmission of business' protections for workers.

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