Following the news that High Street retailer British Home Stores (BHS) has filed for administration, Christina Tolvas-Vincent, Head of Retail Employment at law firm Bond Dickinson, commented:
“Today’s news confirming that BHS has called in the administrators is said to be the biggest high street collapse since Woolworths in the early stages of the financial crisis back in 2008. With almost 11,000 employees, more than 160 stores and a reported pension fund deficit of £571 million, the news will be a big concern for employees. The most likely outcome seems to be that some stores will be sold off to other retailers and a familiar name will disappear after 88 years on the high street.
“Press reports suggest various officials at the shopworkers’ union Usdaw are calling for urgent talks with the company. The experience with Woolworths suggests that the union is certainly not averse to taking legal action when it believes that appropriate consultation with employees has not taken place. However, employers desperate to rescue a struggling business often find it difficult to gauge when and how to engage with the workforce as there is little clarity on whether a sale of the business is likely to be possible or whether redundancies may prove necessary; something that is usually a decision for the administrators at a later stage in any event. The legal requirements can be difficult to interpret and cases are still progressing through the courts on potential criminal liabilities where there has been a failure to notify The Department for Business, Innovation and Skills (BIS). The potential penalties are enormous: an unlimited fine for a failure to notify BIS and compensation of up to 90 days’ actual pay for each affected employee for a failure to carry out collective redundancy consultation properly.
“Complying with collective consultation obligations therefore poses real challenges for employers and administrators, especially ensuring that meaningful consultation takes place at the appropriate time.”