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Episode 159 - What did we miss in explaining a company going into administration?
87 Plays9 hours ago
Cover news for the 5th of May 2026 covers the first review in 16 years to the National Employment Standards, Jobs and Skills Australia's CEO forecasts how many Australian jobs AI will wipe out, UoQ research about younger workers' views of their older colleagues and Amazon moving into the recruitment sector. In Question of the Week, we follow up on last week's news about Hudson Australia's voluntary administration by answering additional questions about the VA process.
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Transcript
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Review of National Employment Standards
00:00:30
Speaker
This is the news for the 5th of May, 2026. I'm Adele Last. And I'm Ross Klenit.
00:00:35
Speaker
Adele, I see the first dedicated review of the National Employment Standards in 16 years is officially in full swing, with public hearings underway as of last Friday, the 1st of May. The Standing Committee on Employment, Workplace Relations, Skills and Training is looking at whether the standards are still fit for purpose. given how much the workplace has changed since 2009. Dr Karina Garland, the committee chair, mentioned they want to understand how these standards operate on the ground for all Australian workers.
00:01:04
Speaker
They are specifically looking at contemporary issues like unpaid overtime, seven-day trading and even the impact of AI-driven rostering. It makes sense because the current framework was built for a different era.
00:01:17
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Unions are pushing for substantial changes to rebalance work and recovery. arguing that gaps in the current system mean some employees are missing out on their full entitlements. Inquiry is also hearing about the negative effects of irregular rosters on mental health and financial security, especially for part-time and casual staff.
Proposed Changes to Work Hours and Leave
00:01:37
Speaker
There is a concerted push for more predictability and human oversight when automated systems are used for scheduling shifts for workers. Beyond just hours, they are discussing whether the and n NES should recognise newer forms of leave and caring responsibilities. If these changes go through, we could see a shift toward a much more expansive view of the time workers need away from work throughout their lives. Certainly sounds like this will give employers lot to consider. They'll need to rethink job design, roster management and how they handle psychosocial risks linked to overwork.
00:02:12
Speaker
Exactly. And while the final shape of the reform is not yet clear, the direction is definitely toward a more robust and contemporary safety net. We might even see a 35-hour week or five weeks annual you leave. Public hearings continue this week and ah RNA will report significant updates as they occur.
Impact of AI on Workforce
00:02:30
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seems the Productivity Commission is estimating that AI adoption could wipe out about 4% of Australia's workforce, which is roughly 600,000 jobs, Adele.
00:02:42
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What's more concerning is that Barney Glover, the Commissioner of Jobs and Skills Australia, thinks that number might actually be higher than forecast. He mentioned that while the impact varies by occupation, we could see automation affecting more than that initial 4% estimate.
00:02:58
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Glover mentioned we'll see more augmentation than total automation in the near term. He predicted augmentation could affect more than 30% of roles, meaning IAI will most likely enhance how we work rather than replace us.
00:03:12
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Exactly. Research pointed out that this automation will likely be concentrated in routine roles like clerical work, while high-skill roles like managers will see more augmentation.
00:03:24
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We know there are already redundancies in industries like law, finance and tech.
Ensuring Fair Distribution of AI Benefits
00:03:29
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To manage this, Federal Workplace Relations Minister, Amanda Rishworth, just announced the AI Employment and Workplaces Forum.
00:03:39
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The idea is to get unions, employers and the government to work together to ensure the productivity benefits of AI are shared fairly. It's a smart move to make sure our laws remain fit for purpose as technology changes so rapidly. They really need to monitor those data indicators every few months because the landscape is shifting much faster than it was even a year ago. remain sceptical this forum will produce anything of real value,
Stereotypes Against Older Workers
00:04:05
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Adele.
00:04:05
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This will be, I suspect, dominated by larger companies and older, almost certainly mostly male CEOs. I'm guessing it'll be a talkfest with lots of disagreement and a little consensus about what the practical and realistic solutions are.
00:04:24
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Ross, did you see the new report from the University of Queensland about how older employees are being treated at work? I did. And nothing seems to change, Adele. I've been blogging about older worker stereotypes since I was a young blogger. And now that I'm an older blogger, I'm disappointed but not surprised. Nothing has changed in nearly two decades. Younger workers are still stereotyping their older peers as less competent, less trainable and less adaptable.
00:04:55
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Exactly. and Associate Professor Chad Chu noted that this creates a major trust gap where younger workers are often less trusting of those with more experience. seems the shift towards horizontal workplace structures contributes to this, according to Professor Chu, as younger employees often wonder why their older peers in similar roles haven't advanced further in their careers. The conclusion seems to be that these veterans are less respected by their younger peers, even if they view them as supportive colleagues. and The worst part is the cycle that it creates. If younger staff are reluctant to collaborate or share information with their older colleagues, supervisors might mistakenly believe the older worker is underperforming.
00:05:39
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And Professor Chu's research wasn't anecdotal. He and his team surveyed 199 employees across 56 professional teams in Taiwan and conducted experiments with 177 Australian participants.
00:05:53
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The Australian study used a scenario with a 55-year-old engineer. 55-year-old, god, ancient. In the study, younger participants consistently expressed lower levels of trust in that engineer's capabilities. It is a harsh reality that even when older workers are seen as nice, They are frequently underestimated by those they work alongside.
00:06:16
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I wonder whether those ah younger workers realise they will be old one day, Adele, in the not-too-distant future, in fact.
AI-led Hiring Solutions by AWS
00:06:25
Speaker
Another major tech giant has moved into the hiring space, Adele. Amazon Web Services has just officially announced that it's moving into the recruitment space with the launch of Amazon Connect Talent, an AI-led hiring solution.
00:06:43
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This is just another glorified chatbot, isn't it, Adele? They are not positioning it that way, Ross. Amazon says its entry into this market is heavily informed, by its own decades of experience in hiring science and large-scale operations. The solution is designed to mimic effective human workflows while providing the scalability needed for mass hiring surges.
00:07:07
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According to Amazon, this is agentic AI. Unlike traditional tools that simply organise resumes or send automated emails, Amazon say these are essentially AI teammates. They conduct full real-time voice interviews 24-7 designed specifically for companies facing immediate hiring surges where hundreds of people need to be screened in a matter of hours, not weeks.
00:07:32
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Amazon says the main differentiator is that while many competitors rely on asynchronous video where you record yourself answering a screen or natural language processing via text chat, Amazon is betting on live voice. It feels more like a real conversation even though you are speaking to an autonomous agent.
00:07:52
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And what about recruiters themselves, given Amazon are replacing all their people with robots in their ah warehouses? Are they aiming to replace human recruiters?
00:08:04
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Amazon is positioning this as a tool for talent acquisition leaders rather than a replacement. The AI scores the candidates and populates a dashboard, but the final hiring decision and the actual job offer still come from a human. It handles the heavy lifting of initial screening so recruiters can focus on the final selection.
Future of Recruitment at TalentX Festival
00:08:23
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The launch of Amazon Connect Talent is being positioned as a key part of a broader strategy to diversify the Amazon Web Services portfolio and capture new revenue streams.
00:08:37
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I'm sure Amazon is hoping for greater success than Google hire, closed down in 2020 after just three years, and jobs on Facebook, shut in early 2023 after operating for just over five years. Yeah, it seems there is a failed track record of tech giants attempting to monetize the world of recruitment and ta We'll see whether this will be any different for Amazon.
00:09:00
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And just a reminder, TalentX is only two weeks away, the Recruitment Industries Festival of Innovations being held in Melbourne on Thursday, the 21st of May, 2026, 8.30 to about three o'clock in the afternoon. It's a fantastic event. I'll be on stage hosting the panel, The Future of Recruitment, heaps of other great sessions going on. Tickets are $299 plus GST, cheaper for groups.
00:09:28
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Go to txrec.com.au for more information. Stay tuned for Question of the Week.
00:09:42
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Question
Reasons Behind Companies Going into Administration
00:09:43
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of the Week. What did we miss last week in explaining a company administration process for us? Yes, well, this has come up because firstly, we had some listeners ask questions of us, things that we didn't cover. And also in listening to the recording, I realised that there was something quite significant. Although it wasn't inaccurate, it was incomplete in terms of an answer I gave you.
00:10:06
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Okay. so what did you want to re-explain? So the thing that i wanted to re-explain was the question about companies that are unprofitable that continue to trade. compared to companies that are unprofitable and to, and go into administration.
00:10:23
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So tell me about the difference if a company, and this was a question that we discussed briefly, and I know that a lot of people followed up with, if the company is profitable, why is it going into administration? Yes. So the thing that I failed to explain, I missed in explaining was cash.
00:10:41
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So let me give you a very specific example. Um, ChatGPT is a product that OpenAI produces. Now, OpenAI i as a company is a private company.
00:10:54
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OpenAI i is a hugely unprofitable company. It is losing billions of dollars a month, but it doesn't matter because it's got a huge amount of cash to draw on.
00:11:07
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Where's the cash coming from? Well, the cash comes from the people who are owning the company. And so, Microsoft is an example of an owner of that company. And so, as long as the owners continue to put in cash, then it doesn't matter that the company is unprofitable because all of that cash from the owners is there to subsidise the ongoing operations of that unprofitable company. So, they are running the business...
00:11:37
Speaker
on paper in an unprofitable you know balance sheet. But because there's this almost unlimited flow of cash coming in, they can continue to trade. Yes, that's right, because they continue to pay their bills. And the owners do that because in the long term, they believe that the loss will turn around, that in the long term, um the business will be profitable and their investment will pay off. Okay, so how does this relate specifically to the Hudson case that we announced last week? Well, the Hudson case, like any company, when it goes into administration, the owners have stopped putting in cash. The owners have said there is no more cash. And if the company cannot raise that money from other financiers, then because it's a critical responsibility of a director to ensure that a company can meet its debts when and when they are due, then the only thing they can do is put the company into administration because there is not cash to meet the ongoing debts of the business.
00:12:44
Speaker
Is it a strategy that some businesses work under that they actually do rely, as you mentioned, like open AI, that they know it's not profitable, but they rely on that investor cash? Absolutely.
00:12:57
Speaker
Yes, because they know it's there. Like the cash is already in the bank. Now, if you're a Hudson, they've had some cash in the bank, but because it's been insufficient, they've had to go into administration because the owners are not prepared to put in more cash. Now, if the owners of Hudson have said... oh, we'll put in another $2 million dollars to keep the company um solvent, then that's no problem. But clearly the owners have decided we're not putting in any more money. Okay. And once we're at that point, then it is put into administration. They appoint administrators. We went through that last week. And you mentioned about the Docker contract. Let's talk about that a bit in more detail as well.
00:13:44
Speaker
Sure. Well, again, I didn't mention this last week, but the critical people here are the creditors. So we have three types of creditors. We have secured creditors, priority creditors and unsecured creditors.
00:13:59
Speaker
Okay. So tell me about the difference between those. So a secured creditor, and I'll use the example of COLLAR because this is um a real example that a secured creditor of COLA was a positive. So A positive is a financing business and they financed the invoices. So in simple terms, when an issue when an invoice was issued for a contractor or for for a permanent placement fee, Collar could access the cash of that invoice before it was paid.
00:14:36
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A positive would effectively provide cash against the invoice. So in other words, the money is secured against the invoice, which means that A positive is guaranteed to get their money back because it's secured against the invoice.
00:14:51
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An unsecured creditor would be someone like SEEK. So, SEEK has to wait in line for their money. And a priority creditor is a, or typically an employee. So, an employee's rights are a priority right in terms of the money owed to them ahead of unsecured creditors. Okay. So, you brought up the case of the Collar Group, which we know was a failed process administration process company subsequently closed. But um in terms of, again, the the differences or the comparisons to the current Hudson situation, um secured, unsecured and priority creditors, where does that sit for Hudson?
00:15:36
Speaker
Well, we don't know because there hasn't been a meeting, or to my knowledge, there hasn't been a meeting of the creditors. So, to provide a little bit more information,
00:15:47
Speaker
um In Australia, the creditors meet and decide the future of the company. So effectively, the creditors will agree or disagree with the recommendations of the administrator. So an administrator has the responsibility to put a deed of company arrangement forward to the creditors.
00:16:11
Speaker
And if there's more than one docker, then they put all the dockers forward. They probably will recommend one ahead of the others and then the creditors vote. And the creditors in Australia, in a voluntary administration, they get a vote proportional to their debt or sorry, what's owed to them from that company in administration.
00:16:35
Speaker
Okay. but Sometimes these dockers are pretty interesting. Like for an example, with the Collar one, I remember ah there was only one docker put up and it was proposed at nine cents in the dollar. So what you're saying there is for every dollar that COLA owed you, you're only going to get nine cents and you as a creditor had to decide. I'm assuming know there's no room for negotiation there. You had to just decide whether you were going to accept that or not. Is that right?
00:17:02
Speaker
Yeah, pretty much. And i wrote a blog to that extent, which said COLA creditors are between a rock and a hard place. In other words, They either accept the fact that they're going to get nine, or sorry, the possibility of getting nine cents in the dollar or the possibility if the company goes into liquidation of getting nothing. So it really is a ah pretty, pretty tough choice if you're a creditor.
00:17:24
Speaker
Okay. don't have a Docker yet for Hudson. We're not that far along the process. Is that right? That's right. Docker's dockers then um the next step in the process. And from the statement released by the administrators, they have flagged that there will be a Docker from the existing owners and managers of Hudson in the same way that the Docker put forward to the collar creditors was from the existing owner.
00:17:54
Speaker
Okay. So I'm thinking about this in broader sense of it being, i guess, not necessarily a strategy, but a strategy out of a current situation. So they've no longer got the cash flow or the support of investors or investor cash. They've had to put the company into administration. a doc They deal with the administrators and create a docker that's put out to the creditors. Let's assume the best case scenario that the creditors accept that and say, okay, fine, we'll take a lower amount, hopefully in the in the um case, hopefully it's not nine cents in the dollar, but let's say they take half of what they're owed. What happens after that though? Because then the business is still going to try to trade, Correct.
00:18:35
Speaker
That's right. And that creates a problem because the creditors that are owed money from the pre-voluntary administration state of the company are most likely to be the creditors that will continue to be the ones that the company relies on going forward. So Seek being an example, if you want to post jobs on a job board and you've been using Seek, you're going to likely to want to continue to use Seek. Now, the question is, will Seek having effectively lost 91 cents on every dollar they were owed, will they continue to offer credit to that company? Or will they say to that company, I'm sorry, you are going to have to pay upfront for your advertising. And this makes the company's trading problems moving forward under a dock are potentially even more difficult because instead of having 30 or 45 days to pay an invoice, they may have to pay an invoice upfront before they receive any services. And of course, this creates an additional strain on the company's cash flow, making it even more difficult to continue as a going concern.
00:19:40
Speaker
So it really is a difficult process from here on. We wait to hear more about the Hudson process specifically. is there anything else you want to cover on this, Ross? No, other than anyone's interested in more specific information, then if they Google Ross Klinett blog Collar Group, there are quite a few blogs there where I've specifically detailed the Collar administration and specifically the processes around the Docker. And so there's much more there that if you're interested, that you can access compared to what we've got time to explain on Question of the Week.