Tamar Knitting Mills has stood down its workforce, while still owing its 15 employees around $35,000 in entitlements, the Textiles, Clothing and Footwear Union told the Tasmania Mercury.

The Launceston textiles institution halted production on November 3, but owner Ian Thompson was hopeful production would resume soon. He said workers would be signing their "death certificates" if they pushed for their entitlements. "We would have to shut our doors," Mr Thompson said.

"What they need out of it is a pittance compared to what I have put into it. I am very concerned for their entitlements but all I am saying is they just need to give me time."

Tamar Knitting Mills was founded in 1926 and is the only working mill in Australia that is also a tourist attraction. Some 19,000 tourists passed through its doors two years ago.

Mr Thompson said it was not unusual for staff to be stood down at this time of the year because of low demand for woollen garments. But this year, more serious factors were also at play.

The decision to stand down staff followed some unexpected news from the bank.

"They cut back my overdraft, in half, without even discussing it with me," he said. "This is the time of year when we start to need it."
Mr Thompson would not name the bank but said he was having confidential talks that may save the mills.

Union secretary Doug Shirkey said he did not believe staff would get their jobs back, and vowed to fight for their entitlements.