NZ's Dick Smith stores dodge pay predicament

  • 04/02/2016

By Fiona Rotherham

Current and former New Zealand employees of Dick Smith are not part of the underpayment of staff annual leave, affecting entitlements worth NZ$2.15 million uncovered by the retail chain's receiver, Ferrier Hodgson.

Receivers began analysing Dick Smith's books since they took control of the troubled business in early January. Based on their investigations to date, they understand up to 3200 current and former employees of the Australian business may have been underpaid their annual leave leading entitlements, potentially dating back to 2010, receiver James Stewart said in a statement.

"The underpayment of entitlements appears to reflect an incorrect application of the relevant award."

The receivers have brought the issue to the attention of Australia's Fair Work Ombudsman and the Shop Distributive and Allied Employees' Association.

The receiver's on-going investigations include reviewing other historic entitlement calculations to confirm they have been correctly paid.

Any additional Australian employee entitlements rank as priority claims ahead of the secured creditors.

Dick Smith owes more than AU$140 million to its banks and more than AU$200 million to unsecured creditors.

Almost 200 Dick Smith New Zealand staff are owed $353,000 by the company, which operated 393 stores in Australia and New Zealand. The 62 store New Zealand operation is said by the receivers to be profitable and an attractive proposition for sale.

More than 40 expressions of interest had been received from potential buyers, with formal interest due last week and a shortlist now being prepared.

Private equity company Anchorage Capital bought Dick Smith from Woolworths in 2011 for AU$115m before selling it for AU$520m in a sharemarket float two years later.