China office of Australian agency closes, staff take legal action over terms of dismissal

Ardent Digital logoA dispute has broken out between an Australian digital agency and employees of its China operation, who were left without jobs after the Shanghai office was closed.

Sydney-based agency ArdentDigital, a spin-off company of BlueArc, shuttered its Chinese arm Activate Shanghai on 7 November, letting its staff go on the day they were informed of the closure.

Activate Shanghai was closed after running into financial difficulties.

The closure followed a move by BlueArc to go into voluntary administration in Australia at the beginning of November, appointing SV Partners as its administrator. BlueArc continues to trade, while ArdentDigital is being restructured and is still servicing its clients.

Activate Shanghai’s staff, of which there are 10, claim that the manner with which they were dismissed is against Chinese law, and have sent a legal letter to the company’s Australian owners.

They claim that they were not fairly compensated after being let go, were not given sufficient warning about the closure, and there remains outstanding rent on the company’s premises.

ArdentDigital’s administrator, which is handling the company’s media relations, has refuted these claims, telling Mumbrella that they do not feel staff have been unfairly treated.

The dismissed staffers’ lawyer, Concorde & Partners, set a deadline of Friday 15 November, for a response to the legal letter.

The administrator has since responded, asking for additional time to look into the matter. The staff of Activate Shanghai have extended their deadline to Monday.

“We can accept that the Shanghai operation is no longer needed due to the restructuring [of ArdentDigital], but it is the way the employees were treated and the process which we feel is unacceptable,” a former company employee told Mumbrella.

“We feel that BlueArc may not be fully aware that by doing it this way, it is breaking the labour laws of China.”

In an email shared with Mumbrella, they said:

  • Firstly, there are Chinese laws dictating the formal process to close down a business. It is against the Chinese Labour law to just leave the company after a conference call without any compensation.
  • Although BlueArc has repeatedly stressed there is no cash to continue running the Shanghai office (which we believe is true), there are still outstanding debts which BlueArc owes Activate. A service contract was signed with a clause that BlueArc is responsible for making regular milestone payments to Activate to pay for our service. Based on what we can see, there are still a significant number of milestone payments outstanding as of 30th Sept 2013. If this money can be recouped then it should be sufficient to clear our compensation. However, so far we do not see this intention from BlueArc to recoup this money.
  • Thirdly, up until today, there has been no one that’s stepped out to handle the outstanding external debts and closing the social securities for each employee so that they can legally find new work. Usually this should be BlueArc, however they can nominate a person to look after this matter.
  • If we do not hear anything from BlueArc by Friday, then we will take further legal actions with the relevant governing bodies in China (equivalent to Fair work Australia). Once this action has commenced, the governing body will intervene with this case and proceed with the legal process in accordance to Chinese law.

Activate Shanghai was launched in June 2011, serving Australian clients that wanted a Chinese online presence. Clients included Simmons-Simmons, ICAA, Jenny Craig, HIA, Canon, Goodman, Nestle and JB HiFi.


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