Dick Smith support staff cut; employees owed $2m in annual leave error

The axe has fallen on 22 Dick Smith support office jobs, including chief financial officer Michael Potts, while investigations into the business have also revealed staff may have been underpaid their annual leave – to the tune of $2 million.

The restructure sees the immediate loss of 22 jobs from the company's Chullora support office. Bert van der Velde has been appointed as the Group's interim chief financial officer.

Those support office restructure follows the closure of Dick Smith concession stores in David Jones stores, affecting 181 staff.

Receivers and managers James Stewart, Jim Sarantinos and Ryan Eagle, say an issue has also been identified with respect to the historical calculation and payment of annual leave loading for retail employees in the Australian stores.

"Based on our investigations to date, we understand that up to 3200 current and former employees of the Australian business may have been underpaid their annual leave loading entitlements, potentially dating back to 2010," Stewart says.

The underpayment is estimated to be around $2 million, the receivers say.

The issue does not affect employees of the company's New Zealand business.

The employee entitlements will rank as priority claims ahead of the secured creditors. The company owes $390 million, with $250 million owed to unsecured creditors and $140 million to secured creditors.

Stewart says the error 'appears to reflect an incorrect application of the relevant industrial award'.

The Fair Work Ombudsman and the Shop Distributive and Allied Employees Association have been notified of the issue, and receivers say they are now reviewing other historical entitlement calculations to confirm they have been correctly paid.

The receivers say the support office restructuring is not related to the discovery of the underpayments.

Ferrier Hodgson is currently in the process of finding a buyer for the business.