Former BHS staff have won significant compensation for their employer’s failure to consult with them.
The London tribunal concluded that the company had failed to consult on the employees’ dismissal, and awarded 110 BHS head office staff up to 90 days’ wages each. The company should have followed the correct redundancy process.
Despite BHS going into administration, it continues as a legal entity. The tribunal awarded a total sum of close to £1m to the claimants, although they probably won’t share the full amount. The equivalent of up to 40 days’ pay, up to a maximum of £3,800 each, will be paid by the Government’s National Insurance Fund.
BHS should pay the remainder, however it’s unlikely that it will do so.
What happened to BHS?
The 88-year-old retailer collapsed after running out of money. This came only a year after Sir Philip Green sold it for £1 to Dominic Chappell. Closure of the department store chain resulted in the loss of 11,000 jobs and a pension deficit of around £571m.
BHS workers are likely to continue to see cuts to their pension benefits. Workers will receive on average 88% of the value of their original benefits. This will go into a new pension scheme, formed out of the settlement. Although disappointing for the former employees, it’s actually a better result for them than the alternative. If the BHS pension scheme had gone into the Pension Protection Fund, workers would receive between 75% and 79%.