Illegal phoenix activity is when a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.
When phoenix activity occurs repeatedly with the aim of ripping off the company’s creditors and employees, this is considered illegal.
Illegal phoenix activity impacts the business community, employees, contractors, the government and environment.
What are the warning signs?
There are a number of warning signs of illegal phoenix activity. You might notice:
- salary, superannuation and other employee entitlements may not be paid
- you don’t receive a payslip or on your payslip the employers company name is different to previous payslips
- a competitor is offering significantly lower quotes or you are given a quote that is lower than market value
- the company director’s name changes but the manager and staff remain the same.
These are just some of the potential warning signs that a business may be involved in illegal phoenix activity.
What should people do if they suspect illegal Phoenix activity?
There are a number of simple steps you can take to protect yourself.
If you are a business owner you should confirm the business is registered with a valid ABN, ask for references, do a credit check and finally go online and do a search on the company and its directors.
If you are an employee you can contact your super fund to make sure your superannuation is being paid, check your payslips for changes in the company name and you can also call the Fair Work Ombudsman for advice.
You can find more information via Podcast above.
