Administrators have raised concerns about the payroll practices of a labour-hire company that owes seasonal workers from the Pacific Islands $4 million.
PGP Group Australia was in about $28m worth of debt when it went into voluntary administration on October 30 last year.
PGP Group is a major Pacific Australia Labour Mobility (PALM) scheme employer that supplies workers to dozens of regional and rural locations in New South Wales, Queensland and South Australia.
On December 12, the company, which operates under the name Plantgrowpick, resumed trading after a deal was struck with 150 creditors.
Under the deal, the bulk of the company’s biggest debt – a $12.8m tax bill it was paying off incrementally – was waived.
The Australian Taxation Office (ATO) will only recover about $380,000 in public money.
As of November 2023, PGP Group had about 1,200 workers on its books, but administrator PwC’s records showed that as of October 30, the company owed 2,412 employees a total of more than $4m in unpaid entitlements.
Between July 1 and October 29 last year, the company accrued $3.3m in unpaid superannuation and $700,000 in unpaid annual leave.
PGP Group managing director Adrian Knight said employee entitlements would be “paid in full through a creditors’ trust”.
Value of entitlements ‘may be understated’
In documents submitted to the Australian Securities and Investments Commission (ASIC), PwC raised “concerns” PGP Group might have “understated” the money it owed to its employees.
“We have concerns around the accuracy of the values of payroll and related party receivables balances as of June 30 and September 30, 2023,” the report to ASIC said.
“We believe the value of employee entitlements and statutory obligations as of June 30 and September 30, 2023 may be understated.”
PwC did not examine the size of the potential “understatement” but said “inaccuracies” could date back more than two years.
ASIC filings show PGP Group’s finance team was led by a chief financial officer (CFO) who joined the company about halfway through 2021.
“The CFO advised that, upon his commencement with the company, he observed numerous inaccuracies in the company’s financial records which had particular impact [on] balance sheet items, including payroll-related accounts,” PwC said.
‘No long-term payroll issues’
Mr Knight said the company knew of “no long-term payroll issues”.
“We’re very comfortable that our financial statements are accurate as of today,” he said.
“We’re really moving forward post-administration to make sure that we’re providing many hundreds, if not thousands of jobs to Pacific workers who need that employment and to help our customers and our farmers.”
There are more than 38,000 Pacific workers on the federal government-run PALM scheme, which brings residents of Pacific Island countries and Timor‑Leste to Australia to fill labour gaps in rural and regional areas.
The scheme has been massively expanded in the past 12 months and its workers now make up about 10 per cent of Australia’s agricultural workforce.
Fair Work investigating
Australian Workers’ Union national secretary Paul Farrow said the potential issues raised by PwC were “concerning”.
“When you’ve got an administrator appointed and they’re actually making those claims, I think that’s surely enough for the department to step in and say, ‘Right, we really need to have a look at the books and make sure that [PGP] are adhering to the standards that we’re expecting you to adhere to,’” he said.
“The department needs to step in and make sure that this business is viable going forward.”
A spokesperson for the Department of Employment and Workplace Relations (DEWR) said it was continuing to “closely monitor this situation” and would ensure “workers have received all pay amounts they are lawfully owed”.
A spokesperson for the Fair Work Ombudsman said the regulator was “conducting an investigation into PGP Group (Aust) Pty Ltd”.
“As this matter is ongoing, it is not appropriate to comment further at this time,” the spokesperson said.
A spokesperson for the Victorian Labour Hire Authority confirmed it was also investigating PGP.
Tax bill unlikely to be fully paid
When it went into administration, PGP had been on a payment plan to clear a tax debt of $12.8m.
Documents submitted by PwC to ASIC show “trading underperformance” left the company “little ability” to repay the money.
Under the terms of a deed of company arrangement (DOCA) laid out by PwC and agreed to by company creditors, the Tax Office will receive three cents on the dollar for the $12.8m debt.
Other government creditors to receive three cents in the dollar for money owed to them are Revenue NSW, Queensland Revenue Office and RevenueSA.
The company has approximately 150 known potential creditors, excluding employees, who are mainly accommodation and transport providers.
They will receive 48 cents on the dollar for the debts they are owed.
A spokesperson for the ATO said the department could not “comment on the tax affairs of any individual or entity due to our obligations of confidentiality and privacy under the law”.
Company to continue operating
Under the DOCA terms agreed to by creditors, PGP Group will be returned to the control of its directors – Melissa Jane Fangatua, Adrian Ronald Knight, Steven Paul Fowler and Walter Disney Fangatua – and allowed to continue operating.
PwC stated in ASIC filings that it offered the PGP Group for sale but did not receive any binding offers.
Mr Knight said the company had restructured following the administration process and was now trading normally.
PGP Group remains an approved employer under the government-run PALM scheme, which is the source of about 60 per cent of the company’s annual revenue, according to PwC documents.
Concerns about PGP Group have been raised in the past but have not led to the Department of Employment and Workplace Relations (DEWR) cancelling the company’s approved employer status.
In 2015, the company was fined by the Fair Work Ombudsman after an investigation into unpaid entitlements.
A spokesperson for DEWR did not respond when asked why PGP Group’s approved employer accreditation was not revoked in 2015, but said the department took all allegations concerning PALM scheme workers seriously.
“It thoroughly investigates concerns raised and applies remedial action where required, including referral of matters to appropriate regulatory authorities where appropriate to do so,” the spokesperson said.
ASIC proposed the deregistration of Plantgrowpick Pty Ltd in June 2016.
An ASIC spokesperson declined to comment on why the company was not deregistered.
