An issue that was raised in the forum a few days ago concerning a troubling trend in the local games industry was removed due to it's allegation of illegal activity and it's claimed defamatory nature towards a specific games studio. So far, two games companies have been alleged to be or are in the process of re-hiring the majority of staff as independent contractors (and in one of the cases, to another phantom company).
I've been convinced that the issue itself requires more indepth discussion, however, I must emphasise that this is strictly not about the companies or individuals related to this matter and any mention of any companies or specific persons in the comment replies will be removed. Witch-hunting and dragging names through the mud is not in any way constructive but it will distract the whole point of this post, and I think we certainly all agree that tsumea doesn't need that kind of banter on here.
I'm hoping to steer the conversation towards a fair discussion on the legalities involved, and most importantly, to list the options that the employees on the receiving end of a situation like this have. A section from the original post, with the name of the company in question removed is as follows...
The contracts on offer are said to include some dangerous liability clauses for employees.
http://www.fairwork.gov.au/employment/contractors/pages/sham-contracts…
(Removed) employees or any other developers who find themselves in this kind of situation should seek legal advice immediately. ie they should call jobwatch for free advice or get their union involved (eg Eleisha Mullane at the Media, Entertainment and Arts Alliance 1300 656 512).
In my opinion, the companies involved consist of industry people who have a passion for the local games development industry, people who I have long admired for their contributions to the local games industry. I'm finding it hard to believe that they've had to take such drastic measures unless they were put in a predicament where such choices have become necessary to keep the company afloat. It's just a not a clear cut as "bad company taking advantage of employees because they're evil". However, if these allegations are true, they are deeply troubling.
A lot has been said about how much the local games industry has been hurting since the global financial crisis, and with our high Aussie dollar making things even more difficult, it's understandably still difficult for local developers who are competing for game contracts. But how far can a company go to save it from going completely under? Should employees willingly sign dubious contracts and give up their proper entitlements to save the company and their jobs? Or should we encourage the opposite and watch as another studio goes under as we decry the state of the local games industry again?
I am interested in your thoughts and opinions, and would be grateful for any suggestions and options for those who find themselves in this position...
This "trend" has been
This "trend" has been happening for years in pretty much everyone company I have worked in within Australia. Its hardly anything new, although I guess its only beginning to be talked about more because its now happening on a grand-scale with multiple employees being asked to be made redundant in favour of a contract.
entitlement
I think the main thing legally is summed up by this line from Fair Work:
"Employers may do this to avoid having to give an employee their proper entitlements, such as minimum rates of pay and leave entitlements."
If the company involved isn't paying entitlements, then there's an issue.
Reading through Fair Work, this is also relevant to the discussion:
"What's redundancy?
Redundancy under the NES happens when an employer either:
decides they no longer want an employee’s job to be done by anyone and terminates their employment (except in cases of ordinary and customary turnover of labour), or
becomes insolvent or bankrupt.
Note: What constitutes ordinary and customary turnover of labour will depend on the relevant circumstances.
Redundancy may happen when:
the job someone has been doing is replaced due to the employer introducing new technology (i.e. it can be done by a machine)
business slows down due to lower sales or production
the business relocates
a merger or takeover happens
the business restructures or reorganises.
Why Not Name the Companies?
Why can't we name the companies? If they did do these things, whats the harm in talking about it? Someone who would rip off their own employees has no name to drag through the mud. In fact, it would greatly benefit the community to be able to talk about these things openly in a forum. That way, people will be able to know about these employers before they apply for jobs (or, I suppose, contracts). Its fair enough in every other field.
You don't need to go on a Witch-hunt if people are running around cackling, boiling frogs, etc. If these CEOs / managers are running companies properly, they will have a PR piece explaining the situation. Then we can discuss it. If they don't, maybe a discussion will prompt it.
The fact that these people are very powerful members of the GDAA etc, should actually result in more scrutiny, not less.
Its right now, of all times, with everything economically at risk, that the games industry needs to gain some basic values about how it operates. Don't you agree?
Why can't we name the companies?
Why can't we name the companies? .. The fact that these people are very powerful members of the GDAA etc, should actually result in more scrutiny, not less.... I agree 100%.
Having worked in the local industry and seen the way some of these companies operate I think naming them would be beneficial for the local industry in general.
Shame there's so many
Shame there's so many ill-informed graduate and unemployed game developers who will work for this "company" (we all know who it is anyway) just to get experience or a pay cheque. While I dislike the CEO and find him immoral, I'd be surprised if he hasn't covered his ass legally.
Work like an employee, pay like a business
Anyone remember that Simpsons episode where Mr Burns fools his employees into trading their (boring) dental benefits for (free!) beer?
Employers know it's hard for a regular employee to tally up the financial worth of the rights and benefits of employee status - workcover, superannuation, sick leave, long service leave, redundancy pay, unfair dismissal rights etc, etc and compare it to a independent contracting scenario (oh look! free beer!) where you have to operate as a sole trader and do your own accounting and legals, etc.
If only this were real independence we were talking about - as in creative independence, indie game development...
lol
lol - love that everyone here is "anonymous" and asks for names :)
Seriously, EA etc.. have been doing contracts locally for years, why is this a problem for Aussie owned developers? You don't have to accept a contract if presented with one... and who says the contract is a bad one? Have any of you actually seen it?
another thing...
Souri, why is this titled "A troubling trend in the local games industry" - hardly objective....
Contracts are not the
Contracts are not the problem, changing permanent employees to contractors is the issue.
there is no indication of a
there is no indication of a change of role - I see it as essentially one comapny winding down, legitimately from the sounds of it, paying out the employees. Another company is aparently then going to offer employment contracts which individuals may, or may not, sign.
These are not employment contracts.
These are not employment contracts on offer. See the link Souri included in this news item.
You see, this practice is
You see, this practice is well documented. Thats why Fair Work Australia has specific mention of it. He would need to also move company offices and to demonstrate a substantial change in the investor body.
Heh
Yes, there's definitely a change in investor body :)
Why haven't they released a
Why haven't they released a statement? If he's gotten good legal advice (we can presume) then making sure there's a statement on record as to whats going on covers them for all sorts of these legal problems.
Best thing this company - what's the new pheonix name anyway? - could do is make a big show of having at least a core of permanently employed staff who can continue on the development of projects and contractors come on and off. But if this was the case, they would have released a statement by now.
I'm not convinced this isn't illegal. The law seems very very clear.
Why haven't they released a
Why haven't they released a statement? If he's gotten good legal advice (we can presume) then making sure there's a statement on record as to whats going on covers them for all sorts of these legal problems.
Best thing this company - what's the new pheonix name anyway? - could do is make a big show of having at least a core of permanently employed staff who can continue on the development of projects and contractors come on and off. But if this was the case, they would have released a statement by now.
I'm not convinced this isn't illegal. The law seems very very clear.
No payouts
The problem is they are doing this and NOT paying out employees.
Phoenix Laws
Thats all I have to say.
I've read the contract. And
I've read the contract. And I'm the one who has said that in my opinion, it is something for which people should seek advice from their union or lawyer in order that they fully understand the implications of it.
It was me who made the "free beer" comment above, by the way. Apologies for posting that anonymously - I couldn't see a way to log in from the front page.
From my perspective as a game developer who would prefer to spend my time making games rather than lawyering up and getting on first name terms with the guys over at the ATO etc, or covering myself against the liability clauses in these contracts, and as someone who thinks I'm entitled to certain rights in exchange for my dedication to someone else's projects... yes, in my opinion it is bad that genuine jobs in the game industry are being lost and replaced by these kinds of (in my opinion) pseudo-employment arrangements.
You're an indie developer who needs to contract out some artwork to a freelance artist? Sure, whatever. But, in my opinion at least, that's not what's happening here.
As for struggling businesses who cannot afford to provide adequate working conditions and benefits for the people who work full time in their employ developing games for them to sell to publishers... well, perhaps they can't afford to be in business. Some businesses fail, some businesses flourish (something we're starting to see with some of the new generation of Melbourne developers). Welcome to capitalism.
I agree with your final
I agree with your final paragraph. If proper entitlements aren't offered or if the worker isn't paid (or paid late/not at all) they should not be in business. It's ILLEGAL.
Lol
Well given the current situation I wont be posting my Name either: I note that you didnt either; can anyone blame us.
Was it EA in Australia? We have work place laws and standards in Australia and no 'one' industry is exempt from following those laws. Conditions, Wages and Entitlements are more important than who the Company is; as stated earlier in theses posts, this have been going on for years but it would be great to see that as the Industry has matured attitudes towards acceptable employment terms would evolve. Another trend is a Company getting wound up and all of a sudden a new company appears but with less staff and short term Employment contracts but the same Management.
You cannot make someone redundant and then rehire them in exactly the same position, even under Howards Work Choices this was not deemed as legal.
I will be interested to see if this post is actually allowed to stay
If employees want to delve further: APESMA covers Engineers and all staff (including all Artists) fall under the State IT Award which just also happens to mention Overtime rates and the minimum standards.
If this is a true debate call both Unions and ask them to participate? I am sure that they would love a chance to respond on behalf of employees.
Employers why dont you get involved also.
Defamation?
Under Australian law a company with ten or more employees cannot sue for defamation. An individual may if they are named or if sufficient detail is given to identify them explicitly.
Also the truth is a defense.
I'm not a lawyer, so you might like to check.
You certainly are no
You certainly are no lawyer!!!
Individuals and companies can both sue for libel regardless of size.
Never claimed to be...
Just had a discussion with friends who are lawyers, who claim that this is the case. They may be wrong, in which case I get a free bottle of wine.
They cite the Uniform Defamation act of 2006, which they say, states this. (not that they are happy about it...think its a bit crazy. )
Prove them wrong, and get me some vintage shiraz......and bragging rights!
They pointed me at this site....I particularly like that in Tasmania even dead people can sue...... (any dead tamanians who want to sue, feel free to post...)
http://www.smartcompany.com.au/legal-advice/20100531-help-my-business-i…
I also want to add a note of support for Souri. This issue is incredibly difficult, and he is being very courageous for raising it.
Moderation is difficult at the best of times, and these are not the best of times.
Defamation
You can Sue if it is the Truth however it is best to keep the names of the Companies out of this; they know who they are as do we.
The Legalities
(removed) aren't doing anything illegal. It sounds like they're shutting down one company, shedding themselves of staff in the process, and opening up a new legal entity with only contractors. Apart from the moral obligations, there's nothing legally wrong doing this.
I'd say they're going to take a very different tack toward development in the future.
The current employees don't have to sign on to the new (removed) - it's their choice. Being a contractor instead of an employee is a pretty big step, and it's something they'll all have to decide individually. It requires all kinds of new responsibilities that move from the company to the indiviual/contractor. They'll also have to read the clauses very closely and - as the original email says - seek legal advice.
Whether or not a game development company will succeed like this is the question. Perhaps (removed) have a job lined up now ready to go, and then - once it's done - contracts will end until the next project starts. It would be pretty difficult to bid for "work for hire" with only contractors under the belt as it makes it very difficult to ensure that a project will be delivered on time, as there's no guarantees that a developer will stay for the length of the project.
However, it does make sense to make a company that's nimble, lean and agile enough to survive any rocky paths in the future. If they've got a small skeleton crew of non-contracted game developers (designer/art director/programmer), then it's probably going to be the best way to survive the near future and is a good way to develop small original projects that don't have pressing delivery schedules.
Check what is sham contracting.
There a number of tests which the ATO and other government departments use to decide on the legitimacy of contracting relationships. Might be worth checking them out.
Closing Down and Opening Up
Because it's a "new" company - most of the items on those checklists don't apply.
It's really just a question of whether the existing employees want to sign on to the new company as contractors and that it requires.
"New" company
Pertinent use of inverted commas there.
"New" Company
http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/201…
Check out the Phoenix Laws with the ATO
However if proper redundancy is being paid then this is not relevant. Would have to see what your finally payout is and if Redundancy Laws are being followed aka Years of Service and entitlements for thos years.
Common law test for determining sham contracting arrangements
This law affects even a start-up company employing employees in the guise of independent contractors. It's to stop companies who want all the benefits of having an employee without any of the responsibilities.
From http://businessbookkeeping.com.au/files/HRN%20Contracting%20Fact%20Shee…
Summary of Common Law Test Factor Indicative of Employment Indicative of Independent Contracting
Does the worker have control over the way they perform a task? No Yes
Does the worker supply/maintain their tools or equipment? No Yes
Does the worker work standard hours? Yes No
Does the worker incur any loss or receive any profit from the job? No Yes
Is the worker free to work for others at the same time? No Yes
Is the worker paid according to task completion, rather than
receiving wages based on times worked?
No Yes
Does the worker accept that work lasts for the term of each
particular task or contract?
No Yes
Does the worker accept responsibility for any defective or
remedial work which was their doing?
No Yes
Does the worker have the right to employ or subcontract any
aspect of the work to another person?
No Yes
Does the worker have the right to employ an apprentice or
trainee in the execution of contracts?
No Yes
Does the worker understand the arrangement as a contract for
services?
No Yes
Does the worker provide their own public liability and sickness
and accident insurance cover?
No Yes
Does the worker receive paid holidays or sick leave? Yes No
Does the worker render tax invoices for payment? No Yes
Does the worker file GST returns? No Yes
Is tax deducted from the worker’s pay? Yes No