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Episode 158 - When a recruitment agency goes into administration what is the likely outcome?
26 Plays2 hours ago
Episode 158 The recruitment industry copped it from all angles this week—compliance cracks, cooling demand, and shaky global performance. A Fair Work Ombudsman ruling put a spotlight on governance failures, while fresh data showed a clear shift in the market: fewer employers hiring, more roles proving hard to fill, and confidence dropping fast. Globally, the big staffing firms aren’t faring much better, with profits under pressure and outlooks turning cautious. Back home, SEEK data tells a similar story—job ads easing, but demand still holding in key sectors like resources, engineering, and AI. It’s not a downturn—but it is a reset. The market’s tightening, expectations are rising, and recruiters are heading into a more disciplined, and far less forgiving, environment.
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Transcript
Introduction and Wingman Recruitment Ad
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Speaker
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Hudson Australia's Administration Begins
00:00:27
Speaker
Welcome to Recruitment News Australia. This is the news for the 28th of April, 2026. I'm Ross Clennett. And I'm Adele Last.
00:00:36
Speaker
Big news in the recruitment sector, Ross. Hudson Global Resources Australia Pty Ltd trading as Hudson Australia has entered voluntary administration. Yes, big news indeed. I received a few texts on Wednesday afternoon after Hudson's contractors were emailed the news earlier in the day.
00:00:53
Speaker
Company says it's about stabilising the business and preserving value while they work through a restructure and potential recapitalisation. So more of a reset than anything else. Who's taking charge of this process? Administrators from WLP Restructuring and they are Glenn Livingston, Nick Charwood and Ben Ho.
00:01:15
Speaker
They'll oversee the company's operations for the time being. Staff, contractors and clients have been told it's business as usual. The administrators say there'll be no immediate impact on employees, operations or customer contracts while they assess the company's finances. Yes, I spoke to CEO Dean Davidson on Thursday and he confirmed there were no planned job losses or service disruptions. He said morale was strong and everyone Hudson was aligned on continuing to deliver for their clients and candidates.
Hudson's History and Ownership
00:01:42
Speaker
Listeners under the age of 40 would almost certainly be unaware of the history of Hudson Australia and it's a link to the glory days of Australia's most high-profile recruitment agency. Adele, why don't you fill them in? The history of Hudson Australia goes back to two of the recruitment industry's most successful entrepreneurs, Geoff Morgan and Andrew Banks.
00:02:03
Speaker
In the 1990s, Morgan & Banks was Australia's most high-profile recruitment business and after a successful listing on the ASX in 1993. In 1999, the company's shareholders agreed to merge with TMP Worldwide. Four years later, the business was split into the Monster.com job board business and the staffing business Hudson Highland.
00:02:25
Speaker
The name was later changed to Hudson Australia. In early 2018, Hudson Global sold Hudson Asia Pacific to Apache Group, which comprised members of the local Hudson management team, led by then-CEO Mark Stain, who is now the non-executive chairman, and the current CEO, Dean Davidson, for $6 million. Patchy Group also acquired the business's short-term debt of $6.3 million. dollars Since then, the business has traded as Hudson Australia.
00:02:57
Speaker
Have the administrators discussed any plans, Ross? Yes, the consortium, including current owners and management, is expected to propose a deed of company arrangement, a docker, basically a plan to restructure debts and keep the business going.
00:03:13
Speaker
So in summary, Hudson's in administration but still operating and aiming for a turnaround. Let's hope there's a better outcome than the industry's last high-profile deed of company arrangement, Adele, which didn't prevent Collar Group from sliding into liquidation 10 months later.
Brandon Wiley's Compliance Issues
00:03:31
Speaker
The recruitment industry was in the spotlight last week for the wrong reasons. The Fair Work Ombudsman has secured $5,634 penalty. against Brandon Wiley, the former Director of Growth Executive Talent Pty Ltd.
00:03:45
Speaker
What was the breach? It involved failing to comply with a notice of compliance to back pay a 22-year-old employee who was underpaid for seven weeks in early 2023. So the issue wasn't just the underpayment of the employee, but ignoring the FWO order to fix it? Exactly. The court found the non-compliance was deliberate and that Wiley didn't follow through despite repeatedly saying payments of just over $7,000 in unpaid wages, annual leave and super would be made.
00:04:13
Speaker
Did you say Brandon Wiley? Yes, I did, Ross. Why do you know him? I do. he's a real estate recruiter in New South Wales. He contacted me about my programs a couple of years ago.
00:04:27
Speaker
And what happened? We had a conversation about both my advanced program, my leadership coaching program, He was very enthusiastic. He said, oh, I'm keen to do both. So I followed up with a couple of emails, but I never heard from him again. He completely ghosted me. Well, he has ignored you without consequence, Ross, and he did ignore the Fair Work Ombudsman the first time around, but I suspect he won't ignore the FWO any longer. Yes, the Federal Circuit and Family Court judge found that the failure to comply with the compliance notice was deliberate. as She said that Wiley had not exhibited contrition.
00:05:03
Speaker
if he doesn't pay the employee back the $7,026.74 owed and the FWO penalty of $5,634, then he could face jail
Recruitment Industry Insights: Surveys and Financials
00:05:15
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time.
00:05:15
Speaker
The Jobs and Skills Australia latest recruitment experiences and outlook survey just over 1,000 employers for March was released on Thursday, Adele, and it has some mixed news. Yes, it does, Ross. In March, a lower proportion of employers were recruiting. At the same time, a higher share reported having recruitment difficulty compared to both the previous this month and the same time last year.
00:05:40
Speaker
This indicates that while fewer employers are actively recruiting, those that are actively recruiting are finding it harder to fill roles. Specifically, i note the recruitment rate was 48%, which was three percentage points lower than last month and one point lower than March 2025.
00:05:57
Speaker
The recruitment difficulty rate increased by 4 percentage points to 47% of recruiting employers in March, which is 6 points higher than year ago. The biggest news of the survey was the significant drop in hiring optimism. Compared with February, the proportion of employers expecting to increase their staffing numbers in the next three months decreased by 6 percentage points to 15% in March 2026.
00:06:23
Speaker
This was at five points lower than March 2025. I also noted the proportion of recruiting employers who were unable to fill their vacancies within a month fell by six percentage points to 36% in March 2026, equal to the lowest level since the series started in May 2021.
00:06:43
Speaker
Yeah, these results suggest the next couple of months for Australian recruiters could be bumpy ones. Hey, Ross, I was looking at the latest Q1 financial reports from some of the big staffing firms. Not a very rosy picture overall.
00:06:55
Speaker
Yes, Adele, not Rosie at all. Let's start with Manpower Groups or its first quarter revenue go up 2.9%. That was good news on a constant currency basis to $4.5 billion. us dollars Unfortunately, gross profit down 2.8% and net earnings plunge by two thirds to just $2.9 million. us dollars Wow, that's quite a drop in earnings. How did their different segments perform?
00:07:24
Speaker
The Manpower staffing business did pretty well, up 6%, but Experis Revenue fell 9%. That's their IT business and talent solutions, their outsourcing business, down 1%.
00:07:36
Speaker
one percent By region, Asia Pacific was a bright spot, growing 8.1%. However, overall, the market's not impressed. Manpower Group shares are down 26% from this time year ago.
00:07:49
Speaker
from this ah time a year ago Yeah, portfolios for recruitment agency shares not looking good at the moment. What about Robert Half? Did they fare any better? Not exactly. Robert Half's first quarter revenue fell 5.6% to US$1.3 billion, us dollars adjusted for billing days and currencies. Gross profit down 3.8% compared to Q1 last year. Operating profit down 20% to US$13.8 million. dollars Although their CEO, Keith
00:08:22
Speaker
did mention sequential quarter-on-quarter growth. So a tough quarter for them too. And Randstad, the largest global firm, how did they go? ah Not any better. Randstad also had a challenging Q1.
00:08:36
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Revenue for the quarter was 5.51 billion euros down GP down down or dollars.
00:08:49
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And operating profit dropped from 130 million Q1 last year to 105 million euros this quarter. So a difficult start to the year for all of them.
00:09:01
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Ross, the latest data from SEEK shows job ads are still trending down by 0.4% month on month in March. And that's been pretty consistent since September. Yes, but it's not uniform across the country. Hiring has slowed across the eastern seaboard, but WA and NT actually saw growth with WA, the only region up year on year.
00:09:26
Speaker
Sector-wise, there are some highlights. Mining resources and energy and engineering and consulting all saw monthly growth, and engineering is leading annually at nearly 8% growth.
00:09:38
Speaker
which reinforces the point. Infrastructure, resources and trades are still driving demand, while professional services and the public sector pulling back on hiring. SEEK's new AI data shows demand for AI skills continuing to rise, with AI references in job ads up by 75.2% year-on-year, although the growth rate has slowed slightly in the past month.
The Rise of AI in Job Ads
00:10:00
Speaker
And it's most concentrated where you'd expect ICT roles, followed by marketing, science and consulting. So demand is real, but it's not exploding. And on the candidate side, applications per job ad dipped slightly, but activity is still high, especially in education and training roles, which saw a big annual spike.
00:10:19
Speaker
The broader takeaway is a market that's cooling, but not collapsing. Employers are still hiring just more selectively. And with global certainty building, it feels like caution rather than contraction is driving hiring decisions right now.
00:10:33
Speaker
And that's your news up to date, but stay tuned now for question of the week.
00:10:42
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Question
Hudson's Administration Explained
00:10:43
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of the week. When a recruitment company goes into administration, what is the likely outcome? So I... suspect, of course, you're asking this based on the news about Hudson Australia going into voluntary administration, Adele.
00:10:58
Speaker
Absolutely, Ross. But I wanted to kind of break this down a little bit further. What is administration? Okay. So, when a company goes into administration, the the two most common ways a company goes into administration is voluntary administration and let's call it involuntary administration. Quite simply, the differences of these. Voluntary administration the owners of the company put the company into administration, go to the court and say to the court, you need to appoint administrators. Involuntary administrators being appointed is due to the action of a major creditor or a group of creditors. It's not the owners saying we're going into voluntary administration. It's typically the major financier. Typically, a bank will go to the court and ask the court to put that company into administration.
00:11:53
Speaker
Okay, that makes sense that something like a bank or large creditors would request administration if they're owed money. Why would a company choose voluntary administration though?
00:12:04
Speaker
Well, directors have responsibilities, directors of all companies, whether they're private or public. And one of the most significant responsibilities of a company director is to ensure that a company can pay its debts when they are due.
00:12:22
Speaker
And a company would be put into administration by the owners, in other words, voluntary ah voluntary administration, when the owners form the view that the company cannot continue to consistently pay its debts as and when they are due.
00:12:44
Speaker
And when we talk about administrators, are we talking about accountants, ah Typically, yes. So, administrators could be from a big firm like a KPMG or they could be a very specific, and like like ah I mean, a KPMG ah type ah business or firm has a range of accounting firms.
00:13:09
Speaker
functions or services, whereas a firm of administrators purely does administration restructuring and insolvency services. And so they're typically chartered accountants and and CPAs.
00:13:27
Speaker
Okay. So let me unpack this further. the owners of the business, leaders of the business have ah reviewed and assessed that they are not in a position to successfully cover their own debts, pay pay for the money that they owe and have chosen to go into administration, appoint administrators.
00:13:47
Speaker
Isn't this just a soft path into closing a business or or going into liquidation? no no, no, it's not. And this is where I should explain something that might confuse some lets listeners and let's use the Hudson Australia example.
00:14:04
Speaker
So Hudson Australia have said that they are continuing to trade profitably. And I'm sure some people are going, well, hang on, how can a company be able to continue to trade profitably yet has to go into administration?
00:14:19
Speaker
So let me explain with an example. And the figures that I'm going to use, I'm completely making up, but I'm going to use the Hudson Australia example just so people get the sense of it.
00:14:30
Speaker
So let's say Hudson Australia trading profitably to the tune of $100,000 per month. per month The owners of Hudson Australia, as is publicly known, took out finance to buy the company off Hudson Global.
00:14:52
Speaker
So then the owners, Apache Group, had a debt that they, of course, need to repay. So that debt repayment is...
00:15:05
Speaker
big enough to be too challenging for the current monthly profit of Hudson to repay. So again, just using made up figures, let's say the monthly profits $100,000 and yet the debt they need to service is $150,000, then clearly the company is still profitable, but it's insufficiently profitable for the current owners of the business to repay their debt.
00:15:33
Speaker
And at some point, the the owners or the bank or whoever's provided the finance need to or will recognise that this is not turning around and effectively we need to go into administration.
00:15:49
Speaker
So again, i can't help but see this as a bit of a slippery slope to liquidation. If you are making $100,000 profit, but you are owing $150,000, that's not sustainable. So, won't you have to close the business?
00:16:05
Speaker
No, because it's the owners of the business that owe the hypothetical $150,000 a month. It's not the business. So, if there's different owners who don't owe that debt, then the $100,000 month can then go to those owners without the debt or without that amount of debt.
00:16:27
Speaker
Okay. so the business
00:16:30
Speaker
So, essentially the business is profitable on its own when it stands on its own away from the original owners who have debt. The business and its administrators can then operate in a profitable state.
00:16:44
Speaker
Correct. And that's why administrators are appointed because effectively,
00:16:55
Speaker
So that's why administrators are appointed because the owners are now no longer in charge. The administrators are in charge. So the administrators are making the decisions ultimately, although the company executives need to um report to the administrators, ultimately the administrators have the final say on the decisions about the running of the company.
00:17:22
Speaker
Okay, so they separate that out, but then a docker has to be created, a deed of company arrangement, which still involves the original owners. And this is where I find it hard to understand and see that it can be successful. You know, there are other examples of this. We're talking about Hudson today, but we know about Collar Group. We know about Rubicore. Their outcomes weren't so good.
Impact of Hudson's Administration Announcement
00:17:46
Speaker
The companies ended up closing.
00:17:48
Speaker
Okay, and that's true, but the circumstances were quite different. So, if we go back to Collar Group, which meant went into administration um in 2024 and liquidation in 2025, they had never traded profitably.
00:18:03
Speaker
And so, therefore, the likelihood of that business being turned around under the existing leadership that had founded the company was pretty minimal.
00:18:15
Speaker
And so the company did go into liquidation. Rubicor, the same, ah hadn't been profitable for a long while. The leadership of that business was incompetent.
00:18:27
Speaker
And I certainly didn't see once that company went into administration that it was likely to survive as a going concern. And it didn't. Now, that's very different to the Hudson situation. You seem quite optimistic about this, Ross, but wouldn't the public announcement of voluntary administration have an impact on suppliers, staff, creditors, you know, the general public dealing with Hudson now? Won't that impact it? Look, for sure. I mean, there's there's absolutely no doubt that just because the business says everything's going along as usual, even though we're in administration, does not necessarily mean that the stakeholders of the business will act exactly the same as before. So, i mean, classic example would be with some big contracts, there is effectively a get out clause that if supplier goes into administration then that can provide an out for the client with that supplier.
00:19:34
Speaker
Now, if that supplier, in this case Hudson, is doing a really good job, that wouldn't necessarily mean that they would lose the contract. But if they were doing a marginal job, maybe that's a reason to exit them.
00:19:47
Speaker
Staff, of course, staff are told your job is safe, everything's going to be going along as normal. The administrators are coming in to review costs and they're going to look very carefully at staff costs, which are the number one cost of any recruitment business. Do we need that many people? Do we need to be paying them that much? Are those commission schemes really appropriate, et cetera? So all of that is unknown at the moment.
00:20:13
Speaker
Staff could get spooked. They think about what happened with COLIP. Do I need to find a new job now? The recruitment industry is not in a fantastic state. Hudson have a lot of long-term employees.
00:20:24
Speaker
ah They're probably owed quite a bit of money. they're going to think, well, am I better off staying and helping the company get back on its feet or I've had a good run and now I should find something else?
00:20:38
Speaker
Who knows with any
Recruitment Industry Stability Concerns
00:20:39
Speaker
of these things? You don't really know. But certainly it is absolutely right to question whether things will continue as normal, even though the administrators are there to effectively try and make that happen.
00:20:51
Speaker
So it's very uncertain times right now for Hudson's What's likely to be the greater impact for the wider recruitment industry? This is does not look good, right?
00:21:03
Speaker
Well, it's not helpful. i mean, clearly Quest personnel went into administration a couple of months ago. You've got Collar Group last year. i mean, Rubicore was a while ago now. None of these things are helpful.
00:21:15
Speaker
Financiers in our industry will be looking closely at their customers, looking at the recruitment agency sales figures, more importantly, cash flow. and making their own decision about whether those customers are good as a going concern.
00:21:31
Speaker
So, look, never good. I certainly don't think it's a disaster. It's not necessarily even a problem. But put it this way, i certainly wouldn't like another couple of agencies, particularly high-profile ones, to be go to go into administration in the next two to three months.
00:21:48
Speaker
So, for now, it's a wait and see to ah with Hudson to see what the outcome is of this appointment? Yes, I would imagine the deed of company arrangement would be put to the existing company creditors sometime in the next two to three weeks. Administrators like to move quickly because clearly a lot can happen in a short period of time after a voluntary administration is announced. So I'd certainly be surprised if that doesn't happen by the middle of May.
00:22:16
Speaker
So stay tuned, keep listening to Recruitment News Australia. We'll keep you up to date on this story.