The Body Shop has admitted to breaking employment law in sacking hundreds of people at a moment’s notice, The Independent can reveal.
Administrators for the troubled cosmetics company made some 270 head office staff redundant last Tuesday, telling them over Microsoft Teams that they would not be paid beyond the end of the day and the company would not provide them any form of redundancy package.
The dismissed employees – some of whom had worked there for over a decade – were instead told to claim unpaid wages and holiday pay from the taxpayer-funded Redundancy Payments Service. A further 489 job losses and 75 store closures were announced on Thursday.
Employees on last week’s “brutal” Teams call said their sudden dismissal by Body Shop International Ltd was “affecting people financially and mentally”, with one telling The Independent they had been left “on the verge of losing everything by a company that once valued ethics and community”.
This includes at least 15 women on maternity leave or soon to have their baby, who will now only receive goverment maternity pay as opposed to the packages they were offered while Body Shop employees, according to one new mother made redundant last week.
“When I found out I was pregnant, the good maternity package at [the Body Shop] is what kept me going and I know it’s the same for other mums,” said another woman, who warned the situation had “put a massive financial strain on my family” just weeks before she is due to have her baby.
One employee who had worked at the company for 13 years said the sudden end to their pay meant their February wage was not going to cover their family’s bills. “To be treated this badly has taken its toll on a lot of people affected,” they said.
Another said it had been their “dream job” to be hired last March, only to be left “on the verge of losing everything by a company that once valued ethics and community”, adding: “Never in my working life have I ever been treated like this before.”
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They have applied for jobseeker’s allowance, a council tax reduction, and said they plan to ask their mortgage provider to go interest-free for six months “to keep the roof over my head”, adding: “How they can be allowed to treat us like this is beyond me, I don’t even know how they can sleep at night.”
In a response to an email campaign by dismissed workers, administrators at the firm FRP Advisory have now admitted they did not follow “normal regulations” on properly consulting employees or their representatives prior to dismissing them, saying there was “insufficient time” to do so.
Administrators argued in their response on behalf of the Body Shop, seen by The Independent, that they had not properly consulted employees because “a swift reduction” in head office payroll costs was judged to be required, citing their statutory duty to take actions to benefit all of the company’s creditors.
Solicitor Nick Humphreys, of Penningtons Manches Cooper, said that while the email notes there was a tension between the duties owed to employees and creditors, the administrators do appear to be admitting to a breach of duty to employees.
It is not uncommon for companies in financial distress to fail to observe their employee’s rights because of the duty upon directors of such firms to maximise their creditors’ returns, according to Tina Maxey, an employment lawyer at Ellisons Solicitors.
Solicitor Michael Newman, of the firm Leigh Day, said he “would question whether the law has got the balance right between creditors and employees” in such situations, adding: “The creditors will have invested money, but the employees will have also have invested a lot of time and work in the company over the years, and it is a shame that the law prioritises creditors in this situation.”
In reference to the Body Shop’s sudden mass-firing, he added: “For a company renowned for its ethical credentials, it perhaps shows how far it had come from its origins.”
Ms Maxey said a failure to properly consult staff was a breach of their rights but not a criminal offence on the part of administrators or the company, adding: “As long as it has notified the secretary of state of the redundancies, the company can choose whether or not it collectively consults.”
Employees can, however, seek compensation via a tribunal if not properly consulted, and The Times reports that a group of more than 175 Body Shop employees are preparing to pursue a claim through Acas, the government’s advisory, conciliation and arbitration service.
The Insolvency Service said it had been working with Body Shop administrators to ensure employee claims can be processed and paid as soon as possible. “The Insolvency Service’s Redundancy Payments Service will make statutory redundancy and related payments to support eligible employees who have been made redundant,” a spokesperson said.
FRP Advisory has been contacted for comment.