Staff of embattled discount retailer Dimmeys have been made redundant via letter, following the business going into administration in January.
A report in The Age said an unknown number of Dimmeys employees received a letter in the mail on Friday saying their employment was ceased.
It was not clear how many of the retailer’s 500 staff were impacted; however, the paper reported an estimate that at one Dimmeys store 40% of jobs were gone.
It is understood the staff were told their employment ceased due to new ownership of the business, as it had been bought by a company called Cool Breeze.
Shop, Distributive and Allied Employees Victorian Branch secretary Michael Donovan told SmartCompany he understood that staff returned home from work on Friday to the news in their letter boxes.
“We are trying to work out what went on,” he says.
“It was an extremely poor way to handle it. They should meet with staff, redundancies are not pleasant but they should do it face-to-face.
“A good employee would offer an independent counselling service to staff…and would allow the union to be present.”
He says the union, of which a number of Dimmeys staff are members, was not notified of the redundancies.
Donovan was also uncertain of the number of staff made redundant, but had heard it was around 86.
He says staff were told they would receive some of their entitlements this week, while the rest would be paid later.
Donovan says the SDA will be seeking to ensure those entitlements are paid in full and will offer independent counselling to members in need.
“A lot of the staff are in their 30s and 40s, which is the height of needing a solid income with family and mortgages,” he says.
Dimmeys went into administration in January, following a $3 million penalty for breaching product safety laws late last year. The multimillion-dollar penalty was handed down after a Consumer Affairs Victoria investigation uncovered 14,000 unsafe items being sold by the retailer.
Administrators Richard Cauchi, Peter Gountzos and Michael Carrafa were appointed from SV Partners.
At the time, Cauchi told SmartCompany the administration was likely due to the large penalty.
“It’s safe to say it’s probably as a consequence of the fine… All the stores will continue to trade as normal and we intend to keep them under control for the time being,” he said.
“In essence, neither the stores nor the business had a large debt. The principal debt is really to the related parties for stock supplies. There are very few external creditors.”
Cauchi said he would look to sell the business.
“I will continue to trade the business with a view to assess its operations and then look to advertise for the sale of the business,” he said.
The administrators were contacted by SmartCompany this morning for comment but no reply was received prior to publication.