The Body Shop has admitted breaching employment laws by laying off hundreds of people at short notice. The Independent can betray.
The management of the troubled cosmetics company laid off around 270 employees at its headquarters last Tuesday. They were informed via Microsoft Teams that they would not receive any wages after the end of the working day and that the company would not offer them any severance package.
The laid-off staff – some of whom had worked there for more than a decade – were instead told to claim back wages and holiday pay from the taxpayer-funded Social Security agency. A further 489 job cuts and 75 store closures were announced on Thursday.
Employees who took part in the “brutal” Teams call last week said their sudden dismissal by Body Shop International Ltd. had “affected people financially and psychologically,” with one of them saying: The Independent that they had been “brought to the brink of loss” by a company that once valued ethics and community.
Among them are at least 15 women who are on maternity leave or about to give birth and will now only receive maternity pay from the state instead of the flat-rate benefits they were offered as employees of the Body Shop, according to one young mother who was made redundant last week.
“When I found out I was pregnant, (The Body Shop’s) lovely maternity package helped me get through it and I know other mums feel the same,” said another woman, who warned that the situation was “putting a huge financial strain on my family” just weeks before the birth of her baby.
One employee who had worked for the company for 13 years said the sudden end to his salary payments meant that his February wages were no longer enough to cover his family’s bills. “Being treated so badly has hit many of those affected hard,” he said.
Another said it was his “dream job” when he was hired in March last year, only to find himself “on the verge of losing everything from a company that once valued ethics and community,” adding: “Never before in my professional life have I been treated like this.”
They have applied for unemployment benefit and a council tax reduction and are planning to ask their mortgage lender to waive their interest for six months “so I can have a roof over my head”. They added: “How they can treat us like this is beyond me. I don’t even know how they can sleep at night.”
In response to an email campaign by dismissed employees, the managers of the company FRP Advisory have now admitted that they did not follow the “normal rules” to properly consult employees or their representatives before dismissing them. The reason given was that there was “not enough time” to do so.
The administrators argued in their response on behalf of Body Shop, seen by The Independentthat they had not properly consulted employees because a “rapid reduction” in wage costs at the company’s headquarters was necessary, and referred to their legal obligation to take action for the benefit of all the company’s creditors.
Lawyer Nick Humphreys of Penningtons Manches Cooper said that while the email highlighted a tension between duties to employees and those to creditors, the insolvency practitioners appeared to admit a breach of duty to employees.
According to Tina Maxey, an employment lawyer at Ellisons Solicitors, it is common for companies in financial difficulty to disregard the rights of their employees because the directors of such companies have a duty to maximise returns to their creditors.
Lawyer Michael Newman of the Leigh Day law firm expressed concern that in such cases “the law strikes the right balance between creditors and employees”. He added: “The creditors have invested money, but the employees have also invested a lot of time and work in the company over the years. It is a shame that the law favours creditors in this situation.”
Commenting on the sudden mass layoffs at The Body Shop, he added: “For a company known for its ethical principles, this perhaps shows how far it has come since its early days.”
Ms Maxey said that while a failure to properly consult with employees was a breach of their rights, it was not an offence on the part of management or the company. She added: “As long as the company has notified the Secretary of State of the redundancies, it can decide whether or not to conduct collective consultation.”
However, employees can claim compensation if they are not properly heard before a court. The times reports that a group of more than 175 Body Shop employees are preparing to file a claim through Acas, the government’s advisory, conciliation and arbitration service.
The Insolvency Service said it had been working with the Body Shop’s insolvency practitioners to ensure workers’ claims can be processed and paid out as quickly as possible. “The Insolvency Service’s Redundancy Payment Service will provide statutory redundancy payments and associated payments to support eligible workers who have been made redundant,” a spokesman said.
FRP Advisory was asked for comment.
