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Harris Scarfe laid off 59 workers in March. It’s still unclear why

Executives at department store Harris Scarfe and receivers Deloitte made 59 retail workers redundant in March, catapulting them into the worst jobs market in modern memory, but weeks later, the retailer was looking to hire once again.

Given no notice, staff members — some of whom were company veterans — were pulled from their posts and told conflicting stories about why they were being let go, and later erroneously informed they would be ineligible for JobKeeper wage subsidies, announced the day prior.

But in the space of five weeks, internal correspondence and private job postings reviewed by SmartCompany reveal managers at Harris Scarfe had begun looking for new casual and part-time staff, even as several disgruntled former workers sought potential reinstatement through the Fair Work Commission (FWC).

By then the department store had a new owner, Spotlight Retail Group, which had purchased the distressed company from receivership in April, and before long had evidently identified a need for more labour.

E-commerce demand remained elevated, and resurgent retail spending after the pit of the Covid-19 pandemic in April was driving sales momentum upwards across the category.

Text messages between former and retained staff show workers in at least one South Australian store were struggling to keep up with demand, less than two months after their colleagues were let go in an apparent cost-cutting effort to convince Spotlight — Harris Scarfe’s third owner in 12 months — to sign the dotted line.

Almost six months later, Harris Scarfe continues to advertise jobs, and several redundant staff SmartCompany has spoken with are unable to find work as Australia braces for its first recession in almost 30 years. One former long-term employee says they will have their unemployment payments cut in October.

That’s not how the JobKeeper program, under which Harris Scarfe has since claimed tens of thousands of dollars in subsidies, was supposed to work. In the largest corporate welfare program in recent memory, $86 billion has been outlaid on the understanding businesses would keep workers on the books.

But, as has become evident, there is no shortage of Australians who have fallen through the cracks. And in the case of Harris Scarfe, no one — not Spotlight, Deloitte or retail union the SDA — is willing to go on the record to explain why these 59 workers were laid off in the first place.

Help wanted

On May 5, five weeks to the day after the redundancies, Harris Scarfe’s area manager for South Australia and Tasmania instructed store managers via email to refrain from hiring new staff in stores where team members had been made redundant.

They were told the general manager of operations would advise when hiring in these stores would resume, and it wasn’t long before that began happening.

Public job ads for in-store and e-commerce fulfilment staff — including stores where veteran team members were let go — date back to early-June, although store managers were also told longstanding casual staff were “more commercial” for the business, as they were eligible for JobKeeper payments.

Current Harris Scarfe team members told SmartCompany job postings were being circulated much earlier internally, posted in lunchrooms and by other staff on social media.

Former staff allege there was a concerted effort to keep the hiring under wraps for some time. Harris Scarfe owner Spotlight declined to comment on this when asked by SmartCompany.

Posters displayed in lunchrooms called for casuals with “previous retail experience” and “availability to work a 7-day rotating roster”.

It is unclear whether these roles were essentially reconstituted, or if Spotlight has been hiring for genuinely new jobs with different functions. Former staff members are sceptical, while neither Deloitte or Spotlight would provide a detailed breakdown of job descriptions for redundant workers.

What is clear is that Harris Scarfe has been hiring publicly since at least early-June, according to a dozen ads posted on aggregation platforms such as Jora and CareerOne in recent months.

These ads, most of which have since been taken down, ranged from casual in-store roles to e-commerce fulfilment opportunities and store managers.

Most ads were not posted to Harris Scarfe’s official careers page, even while active on third-party websites, including the company’s human resource platform of choice Big Red Sky.

SmartCompany asked Spotlight whether it had re-hired any of the workers it had laid off, as receivers at Deloitte had gone to great pains to do in previous rounds of lay-offs last year, but the company declined to comment.

JobKeeper or JobLoser?

When Harris Scarfe made the workers redundant in March, staff were initially told the COVID-19 pandemic was behind the decision, before later receiving an email saying the redundancies were part of a company-wide restructure ahead of the sale to Spotlight.

When staff followed up to ask whether JobKeeper could save their jobs, they were informed, without evidence, they would not be eligible and were not being included in Harris Scarfe’s application.

As SmartCompany has previously reported, many workers were indeed eligible under provisions outlined in Treasury fact sheets about the program, which were available to Deloitte and Harris Scarfe at the time of the lay-offs.

At the time, a Deloitte spokesperson said the workers would not be eligible for JobKeeper because they were being made redundant.

However, the wage subsidy program was designed to prevent such events from occurring, offering to cover the vast majority of wages for workers from March 31 onwards, paid in arrears from early-May.

Had the $380 million company not had the money to continue to pay the staff, existing provisions within JobKeeper laws would have allowed them to stand down staff temporarily.

The receiver, suitor and the union

But it appears removing workers from the books was regarded as a non-negotiable for the business, which was in the final stages of convincing Spotlight to take over.

Spotlight was unwilling to buy the business unless the workers were let go, effectively holding the future of the entire department store hostage over wage bills the government was prepared to pay for, albeit in a month or so.

The FWC found Deloitte believed this was the case, having adjudicated two unfair dismissal applications arising from the redundancies

In early-June, the FWC heard two matters relating to workers laid off by Harris Scarfe and its receivers at Deloitte. The unfair dismissal applications were filed outside the 21-day time-limit, but commissioners granted special permission for the cases to be heard.

The situation was unique; the union charged with protecting these workers’ interests — the Shop, Distributive and Allied Employees Association (SDA) — did not file the applications in time, even after being directed by both applicants to do everything they could to get their jobs back.

In meetings between SDA national secretary Gerard Dwyer and Deloitte partner Vaughan Strawbridge in early-April, both parties discussed an urgent need to get a pending deal over the line with Spotlight, which was earlier granted exclusive negotiating rights, according to evidence filed with the FWC.

While the SDA initially raised concerns about the redundancies in public and in private meetings with Deloitte, Strawbridge explained the lay-offs were “essential” to convincing Spotlight to buy Harris Scarfe, thus securing future employment for 1,200 remaining staff.

In evidence presented to the FWC, SDA Tasmanian branch secretary Paul Griffin outlined the union’s rationale: “In circumstances where it was being represented to the SDA that any challenge to the decisions made on the part of the Receiver to terminate particular individuals … might jeopardise a sale process that would ensure continuing employment for 1,200 retail workers.”

“The decision was made by the SDA to defer further claim on behalf of those affected employees until the sale process was completed and the employment of those retail workers was secured.”

Spotlight was unwilling to go on the record and confirm whether it made the redundancies a condition of the sale, but evidence presented to the FWC indicates Deloitte believed the lay-offs were necessary to secure the deal.

The FWC found, in both cases, that the SDA failed to manage its conflict of interest by bringing in another independent advisor to help the workers, or even by properly informing either of its members of the situation.

“Rather than take any step to deal with the obvious conflict of interest, Mr Griffin did nothing, and worse still, did not inform the applicant that the SDA had made a deliberate decision, contrary to her interests, not to lodge the application within the 21 day period,” FWC deputy president Saunders said.

“It is unusual or uncommon for a member of a union to provide clear instructions to their union and then maintain regular communication with their union, but not be informed that the union had made a deliberate decision to act in a manner inconsistent with their best interests,” Saunders also said.

Both workers were given extensions of time to file their full unfair dismissal applications, but the FWC is yet to hear either matter.

Former workers remain hopeful the cases will go further in uncovering how Harris Scarfe handled their redundancies, and shed light into why they were let them go in the first place.

Spotlight Group and Deloitte declined to be interviewed or provide comment for this story. The SDA did not respond to requests for comment.

This story first appeared on Smart Company and has been republished with permission.

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