The Body Shop “Brutally” Mass-Firing Hundreds, Now Questioned for Prioritizing Creditors Over Employees

By Moon Harper

Mar 04, 2024 05:26 AM EST

The Body Shop has confessed to violating employment laws by suddenly laying off hundreds of employees, as revealed by The Independent.

Last Tuesday, administrators for the troubled cosmetics company laid off around 270 head office staff, informing them via Microsoft Teams that they would not receive further pay after that day and would not be offered any redundancy compensation.

Instead of receiving compensation, the terminated employees, including those with over ten years of service, were instructed to seek unpaid wages and holiday pay from the Redundancy Payments Service, which taxpayers fund. Additionally, on Thursday, the company announced an additional 489 job cuts and the closure of 75 stores.

The "Brutal" Mass-Sacking

Employees who were abruptly let go during last week's "brutal" Teams call described the dismissal by Body Shop International Ltd as having a significant impact on their financial and mental well-being.

This encompasses a minimum of 15 women on maternity leave or about to give birth, who will now solely rely on government maternity pay instead of the packages they were previously offered as employees of Body Shop, as stated by one new mother recently laid off.

An employee with 13 years of tenure at the company expressed that the abrupt end to their pay meant that their February salary would not be sufficient to cover their family's expenses. They conveyed that being treated in such a manner has greatly impacted many affected individuals.

Another individual mentioned that landing the job last March had been their dream job. Still, now they find themselves "on the brink of losing everything" due to a company that was once known for its emphasis on ethics and community.

They have submitted applications for a jobseeker's allowance and a council tax reduction. They intend to request a six-month interest-free period from their mortgage provider "to keep the roof over my head."

Admission of Not Following Regulations

In response to an email campaign by fired workers, FRP Advisory administrators acknowledged not following "normal regulations" for consulting employees before dismissal, citing "insufficient time," arguing that a quick cut in head office payroll costs was necessary to benefit all company creditors, as per their statutory duty.

The Body Shop in Hot Waters Due to Breach of Duty to Employees

Solicitor Nick Humphreys from Penningtons Manches Cooper suggests that while the email acknowledges the tension between duties to employees and creditors, the administrators admit to breaching their duty to employees.

According to Tina Maxey, an employment lawyer at Ellisons Solicitors, it is common for financially distressed companies to overlook employee rights due to directors' duty to maximize returns for creditors. Maxey explained that failure to consult employees properly is a breach of their rights but not a criminal offense by the administrators or the company.

Solicitor Michael Newman from Leigh Day questions whether the law properly balances the interests of creditors and employees, noting that employees invest considerable time and effort in companies, yet the law prioritizes creditors.

Employees' Fall Back

Employees can seek compensation through a tribunal if they are not properly consulted. The Times reports that over 175 Body Shop employees are preparing to file a claim through Acas, the government's advisory service.

The Insolvency Service is working with Body Shop administrators to ensure quick processing and payment of employee claims. Still, a spokesperson assured us that the Redundancy Payments Service would provide necessary payments to eligible affected employees.