Couple fined €18,400 after failing to pay their employees

A court has fined a couple €18,400 after finding them guilty of breaching employment law, including failing to pay nine of their employees.

The employees were awarded various sums.

The court also ordered that the nine different judgements covering the case be sent to the European Public Prosecutor’s Office, the Police Commissioner and the Commissioner for Inland Revenue to investigate the case further in view of the testimonies in court.

Nadia and Anton Theuma served as directors, legal and judicial representatives of 5 Senses Ltd and directors of Paragon Limited.

The pair faced nine separate cases in connection with unpaid salaries, annual leave, allowances and statutory bonuses for nine employees between the two companies.

A representative for the Department for Industrial and Employment Relations (DIER) testified that nine employees across the two companies owned and run by the accused made several claims of outstanding amounts owed to them.

They explained that in January 2023, the accused couple claimed they had a property waiting to be sold and would settle the outstanding payments once the sale went through.

Despite the promise, when the Theumas were asked to meet again with DIER for an out-of-court settlement, the meeting was never held, and the cases were passed onto the police.

It also emerged that there were claims that the employees were eventually paid, but DIER never received proof of payment.

The representative explained that the accused agreed the salaries were owed but contested the amounts due to unused vacation leave. The contestation was raised before criminal proceedings began.

The employees had also filed separate civil proceedings against the Theumas.

Spiralling costs

A former senior manager explained how the two companies spiralled into crisis from 2022, delaying salaries for months while prioritising suppliers and student utilities bills, while leaning heavily on freelancers who cost more than staff.

Testifying after working for 11 years with 5-Senses Ltd and Paragon Ltd, Maria Grazia Borg said the workforce shrank from almost 70 employees before the pandemic to just 11 when COVID-19 hit, even as a digitisation drive in 2020 added costs.

In 2021, the workload rose, but revenue did not. By July 2022, Borg warned director Nadia Theuma that salaries could be met for that month only; July pay was eventually settled in mid-August.

Borg said the companies increasingly relied on ‘gig workers’ from online platforms such as Upwork and Freelancer, costing €25,000–€30,000 monthly versus the €20,000–€21,000 spent each month on employees.

She and fellow manager Carl Pace raised the issue with the companies’ directors.

Unpaid bills

In August 2022, there were no funds for wages or service providers; landlords and host families threatened to evict students, while ARMS and telecoms pressed for payment, she said.

Salaries for August were not paid despite payslips being issued. Payrolls covering September to November that year were prepared but remained unpaid, she said, adding maintenance and housekeeping staff had been forced to use their own cars without being paid allowances.

Borg underlined that the directors were aware of what was happening and that she had always acted on their instructions.

She recounted that Theuma had claimed the companies were pursuing a lucrative contract and had even asked whether the firms could receive money from Nicaragua; Borg said such payments would need to be checked against EU sanctions.

Lay-offs

In October, the directors said they could no longer keep their full-time staff. Borg suggested part-time or casual employment instead, and informed employees via a chat group.

Some of the staff resigned – with Borg testifying the directors refused to speak with them when contacted – while Borg and Pace were asked to waive their notice periods. Borg was dismissed on 11 November 2022 but continued assisting the companies until April 2023.

Borg eventually found out that suppliers were being paid in cash, and became aware that it had been rumoured she was fired because she was constantly unwell.

According to Borg’s testimony, one of the employees heard Nadia Theuma claim the couple fired all employees because they were deceiving the company.

EU projects

From Borg’s testimony, it emerged that Nadia Theuma had access to payslips, then used the amounts when applying for projects.

“She had access to the information and always knew what the amounts were, and what was being paid and what was due,” Borg said.

Finance officer Connie Frankline Azzopardi testified that leave was omitted from payslips on EU-funded projects to secure funds to pay wages.

In its conclusions, the court noted a “not so discreet tactic” by the accused of settling arrears with employees on the eve of hearings, partly or in full. It rejected the Theumas’ attempts to shift responsibility onto Borg, finding their version not credible and confirming the directors were aware of each employee’s leave entitlements.

Fines and awards

The court ordered payments to nine employees and fined the directors in separate judgments, generally between €600 and €1,500 for each employee.

Given testimony about EU-funded projects, the court ordered the judgment and evidence sent to the European Public Prosecutor’s Office. It also referred the case to the police and the Commissioner for Inland Revenue over alleged unpaid social contributions and withheld FS3s.