Collapse of Arcadia Group leads to Employees’ Potential Entitlement to Protective Award Claims

The High Street has been coming under increased pressure over the last number of years with online shopping becoming more popular than ever before. However, the Covid-19 pandemic has exacerbated this problem, leading to well-established high street brands reconsidering the future of their companies. This has most recently been evidenced by the collapse of the Arcadia Group, which led to the sale of the Topshop, Topman and Miss Selfridge brands to online fashion retailer, ASOS. Furthermore by the sale of the Dorothy Perkins, Wallis and Burton brands to online fashion retailer, Boohoo.

ASOS announced the deal to save the brands at 7am on 1st February and by 7.45am had sent out a tweet welcoming Topshop and Topman to “the ASOS family”. However, the administrators of the Arcadia group, Deloitte, subsequently announced that around 2,500 staff at 70 stores would not be part of the acquisition, resulting in significant job losses. This failure to inform and consult with employees caused major uproar on social media by disgruntled employees.

Pursuant to employment legislation, Employers are legally required to consult with employees prior to making their positions redundant and must formally notify them that their roles are at risk of redundancy. If an Employer is planning to make 20 or more employees redundant at one location within a 90 day period, the Employer has greater obligations which they must adhere to by following a collective process. In these circumstances, Employers must consult with the Trade Union involved in the business or alternatively with elected employee representatives before any employee is given notice of redundancy. Employers are also required to commence a minimum 30-day consultation process with the employees involved. During this time, employers should explore any alternative options to redundancy.

If Employers fail to follow the collective consultation process, employees may be eligible to make a protective award claim. If covered by a protective award, an Employer is liable to pay an employee’s gross salary for a protected period of up to 90 days. This applies to all full time and part time members of staff, regardless of the length of time they were employed.

Arcadia employees have reported that their employer did not put them on notice of a potential redundancy situation nor did they consult with them. Consequently these employees will have claims for automatic unfair dismissal and protective award.

In order to pursue a claim, an employee must submit an ET1 Claim Form to the Industrial Tribunal within 3 months of the date of the effective date of dismissal. In this case, the effective date of dismissal will be the employee’s date of termination as stipulated by Deloitte, the administrators of the Arcadia group.

Whilst the Arcadia group may not have sufficient funds to pay for the potential protective awards to employees, employees are entitled to claim the protective award from the Redundancy Payments Service NI (which forms part of the Department of the Economy) for up to 8 weeks gross pay, capped at £560.00 per week.

This serves as a warning to Employers, that they are still under a duty to comply with all employment legislation regardless of covid-19 or any economic or commercial factors. Employers must carry out a thorough consultation process with employees before commencing a redundancy process, as in the alternative, employees can pursue a potential protective award claim against them in the Industrial Tribunal.

Employees of Topshop, Topman, Miss Selfridge, Dorothy Perkins, Wallis and Burton are encouraged to get in contact with Jan Cunningham or David Mitchell in our Employment team to seek advice in relation to a potential claim.