QLD Business Partner Drawing Unauthorised Wages - What to Do?

Discussion in 'Commercial Law Forum' started by Donnaspecter, 14 August 2017.

  1. Donnaspecter

    Donnaspecter Active Member

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    Good morning,

    I'm the office manager/bookkeeper for a small business owned by two brothers with 50/50 ownership of the business. The brothers have no signed partnership agreements in place. They operated with a Family trust but since 2012 have registered a Company and there are no agreements between them with regards to time off, etc.

    They have verbally agreed to have two weeks paid leave each about a year ago. The one brother's wife has just had a baby and he's taken additional time (on top of his agreed 2 weeks which he's already taken). When we didn't pay him for the time off, he insisted that as a business owner he's entitled to it. Eventually we've paid him in full for his regular wages.

    Now he's just had Carpal tunnel surgery on both hands and is unable to do anything. The agreement was that he will see what his income protection insurance will cover and that we will cover the balance. But he never came back to me or his business partner (brother) with any confirmation of his insurance or anything so we never paid him a wage. Then he's taken the company bank card, transferred money from our GST account into the company account and withdrew the money cash.

    He's done this without authorisation from his business partner or without informing me as the office manager. He's also expected to take 6 weeks off work for which I now assume he's going to insist on payment as he's the business owner. The problem is our little company can't afford to pay a business owner his full wages without doing any work. He's not phoned in to find out how we are coping or if there is anything he can do to assist us from home or anything at all. He's completely cut us off but he's still insisting on his full wage payment. What are our rights?

    His brother and I are having to run the business and carrying all the extra responsibility and stress with getting work for our employees. How do we proceed now?

    What I can understand is he's applied for his income protection but those payments will only be coming through in a few weeks time but surely it's insurance fraud if he's taking a drawing from the company and he's already applied for his income protection insurance.

    Please some help will be greatly appreciated. We're really in a pickle!
     
  2. Rod

    Rod Lawyer
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    The working brother needs to get proper legal advice. Unauthorised taking of company money can be both a criminal and civil matter.

    At a minimum he needs to tell the 'non-working' brother to keep hands off any more money else he will be reported for multiple offence like theft and breach of director's duties. Both are serious offences and have ramifications beyond the offence itself.

    The brothers also need to get their act together and get written agreements in place.
     
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  3. Donnaspecter

    Donnaspecter Active Member

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  4. Tripe

    Tripe Well-Known Member

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    If the two brothers have no agreement between them and have equal share in the company then the brother taking money out of the company is not doing anything wrong, its 50% of his company and he owns 50% of money in any account (and 50% of company liabilities), for example he could sell his 50% share of the company if he wanted to.

    He (and you) can just book these withdrawals as a director dividend as long as he declares it on his income tax, then nothing illegal is being done, this does not mean it is morally the right thing to do.

    However company Directors are not allowed to trade while insolvent, then this would be a completely different situation.

    The two brothers need to have a formal agreement in place.
     
  5. Donnaspecter

    Donnaspecter Active Member

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    Yes I get that but how is it fair if he's not working at all and drawing his full wages while the other brother is working long hours and working every weekday and getting paid the same amount. Verbally they have an agreement to take 2 weeks paid holiday leave.????
     
  6. Tripe

    Tripe Well-Known Member

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    He owns 50% of all assets, so he can do what ever he likes with 50% of the company assets.

    I would book the money taken out of the company accounts via Credit Card as a Directors dividend as opposed to a wage and pay the other brother the same dividend, this would even things out

    is it Fair? No
     
  7. Donnaspecter

    Donnaspecter Active Member

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    Uhm, it sounds a bit like breach of directors duties putting his own financial gain ahead of the Company especially when he transferred funds from the payroll and GST account before he withdrew the cash. But anyways thanks for your response.
     
  8. Rod

    Rod Lawyer
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    No he can't. This is not the way companies work.
     
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  9. Tripe

    Tripe Well-Known Member

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    So he can't sell his 50% share ?
     
  10. Rod

    Rod Lawyer
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    He may not be able to. Depends on the agreement between the brothers.

    And this is not related to treating a company like it is solely your own property. Where an agreement between the brothers already exists, even verbally, one brother does not have the right or authority to unilaterally change the agreement or strip the company of assets and cash.

    Some company decisions require more than 50% of directors, or more than 50% of shareholders before they are legal. This automatically rules out one brother making a decision by himself when the shareholding is 50/50 and there are only two directors.
     
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