Harris Scarfe workers outraged as receivers make 59 staff redundant the day after wage subsidy announcement

Harris Scarfe

Workers at collapsed department store Harris Scarfe are outraged after being made redundant earlier this week, just a day after the Morrison government unveiled a $130 billion wage subsidy scheme they say could have saved their jobs.

The redundancies, announced by Harris Scarfe receivers Deloitte on Tuesday, have seen 59 staff laid off — 16 from support centres in Melbourne and Adelaide and 43 across nearly two-dozen stores nationwide.

But several workers served with redundancy notices have since told SmartCompany they were given conflicting stories by management as to why they were losing their jobs, first told the COVID-19 pandemic was the cause, before later receiving an email claiming they’d been chopped in a company-wide restructure.

Retail union the SDA now says it’s concerned Harris Scarfe has fallen foul of the Fair Work Act. Staff say the union was not consulted about the redundancies, which affect just under 5% of Harris Scarfe’s remaining 1,200 staff.

It comes as suitor Spotlight Retail Group prepares to purchase the struggling business before Easter, having been granted exclusive negotiating rights last month.

Two staff members working at separate Harris Scarfe stores in South Australia told SmartCompany they were first told they would lose their jobs by their area manager on Monday, who said the layoffs were a result of the COVID-19 pandemic.

The workers asked to remain anonymous discussing details of correspondence they are not authorised to disclose.

After being sent home with redundancy notices effective from Tuesday, March 31, staff members emailed Harris Scarfe’s human resources manager to enquire about their eligibility under the federal government’s recently announced wage subsidy package.

The JobKeeper scheme will provide employers with $1,500 payments per fortnight for each full-time, part-time and casual staff member with 12 months of tenure on their books, starting in May and lasting for six months.

Harris Scarfe, which books $380 million in annual turnover, said it intends to apply for the JobKeeper package but told redundant staff on Tuesday they would not be included in those efforts.

“The redundancies made … were part of a wider restructure of the business, required as part of the sale of the business to Spotlight,” staff were told in emails seen by SmartCompany.

“Whilst we wish to assist those employees whose positions were made redundant in any way possible, it is our view that we are unable to make the declaration the redundancy was a direct result of COVID-19,” the emails read.

“We are otherwise happy to provide other letters to Centrelink that explain the circumstances of the redundancy that may assist.”

SDA: “Deeply concerned”

Gerard Dwyer, SDA’s national secretary, said he was “deeply concerned” by the redundancies.

“The union is engaged both with the company and the receivers, but there are real questions whether Harris Scarfe has fulfilled its obligations under the Fair Work Act,” he said in an emailed statement.

“The SDA reserves the right to pursue whatever industrial avenues are available to achieve the best results available for Harris Scarfe staff.

“The union will remain engaged with Harris Scarfe and the receivers.”

Asked why the staff members were not being included in Harris Scarfe’s JobKeeper application, a Deloitte spokesperson said it was their understanding it would not be available.

“As these are redundancies, not stand-downs, and Harris Scarfe also continues to trade, I understand that the JobKeeper option unfortunately isn’t available,”  the spokesperson said.

However, explicit advice provided by the Morrison government about the JobKeeper package does not necessarily rule out employees on the basis of their stand-down status, or employers based on their trading status.

In fact, Prime Minister Scott Morrison on Monday outlined his desire that businesses who access the $130 billion wage subsidy program will continue trading and keep workers on their books.

“This will keep Australian workers connected with their employer and provide hope and more certainty during these difficult and challenging times,” Morrison said on Monday.

A fact sheet about the subsidies circulated by Treasury this week states employers such as Harris Scarfe must merely show a 30% drop in revenue relative to a comparable period a year ago, of at least a month.

Eligible employees must have been in an employment relationship with the applying employer as of March 1, and must still be employed by the company.

Employers accepted into the JobKeeper program will have fortnightly payments backdated to March 30, the day before Harris Scarfe’s redundancy round took effect.

Deloitte declined to clarify its position on whether staff made redundant on Tuesday, the day after the layoffs came into effect, would have been eligible for JobKeeper payments.

Veteran staff let go

Staff SmartCompany spoke with were bewildered as to why Harris Scarfe would move ahead with the layoffs when the business intended to apply for the JobKeeper scheme anyway, acceptance into which would cover the vast majority of their wages for six months.

“It comes at the most difficult time since World War Two and to not care about or even attempt to assist … you’d think they would want to keep on staff if the government was paying for it,” one worker said.

“It’s fairly uncaring, I had worked there for a long time, and some others had worked there for longer like 25 years or 15 years,” they said.

Deloitte receivers have been steadily making large portions of Harris Scarfe’s workforce redundant throughout its administration, having started the process last December with more than 1,800 workers.

The most recent estimate of Harris Scarfe’s headcount provided by a Deloitte spokesperson on Wednesday stood at about 1,200 staff, amid the closure of just under two-dozen stores in recent months.

A Deloitte spokesperson did not confirm whether the layoffs were required as a condition of sale to Spotlight, but said they were “necessary” and that staff would be paid their full entitlements.

“Decisions such as these are never easy, but have been necessary following ongoing, detailed assessments of the structure and resourcing requirements of the business, and with a view to ensuring its sustainability,” the spokesperson said.

Staff said a stay on redundancy for six months would make a meaningful difference to their wellbeing amid the coronavirus crisis, and could possibly open up opportunities for redeployment within the broader Spotlight Group should the sale proceed.

“I thought the [JobKeeper] payments might be a good thing, especially for the company as they can keep people on the books,” another worker said.

“Even if it was just for six months … seeing people line up at Centrelink is a distressing and sad thing to see.”

A redundancy letter handed to employees states Deloitte’s policy is to pursue redeployment where possible, but that no “current opportunities” existed.

Deloitte is expecting the sale of Harris Scarfe to Spotlight Group to be approved at a second meeting of creditors in mid-April, and it remains unclear whether Spotlight would be required to receive and remit JobKeeper payments for the department store in May.

Spotlight Group’s revenue, which is estimated at over $1 billion, could materially change the nature of any JobKeeper application, requiring evidence of a 50% turnover decline, although it is not clear how the ATO would apply discretion regarding a sale process.

Spotlight was approached for comment but declined.

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