Last Christmas for a fashion icon?
Christmas time always brings back happy memories of my time working in Topshop. With live DJ’s John Leslie and latterly Grant Stott entertaining the throng of shoppers, it was a fun and vibrant place to work as a teenager in the late 80’s.
Power dressing was in, and breaks were spent buying school friends their first oversized suit with staff discount. I can still remember the names and personalities of those I worked with, many of whom had a career in fashion retail planned for life, and wonder how they have been affected by the announcement the chain was being put into Administration.
So what does an Administration mean for employees?
On appointment the Administrator essentially takes over the running of the Company, and their first task is to put forward proposals on how they are going to deal with the business.
Broadly, the Administrator will assess whether the Company can be rescued as a going concern or has to be wound up with assets distributed amongst creditors. Either scenario can result in job losses.
To save the Company and allow it to continue as a going concern, restructures may be required to achieve efficiencies. The Company, or part of it, may be bought over by another business resulting in some or all of the staff transferring to a new employer which could involve TUPE considerations. If a decision is taken to wind up the Company then of course the entire workforce could be declared redundant.
The main difficulty for employees is the uncertainty which ensues while these considerations are being made.
What will happen to their jobs?
Will they will continue to get paid their wages? Will they continue to receive sick pay or maternity pay? If redundancy is declared, will they receive their statutory entitlements?
If there can be any reassuring words in such a difficult situation it is that Administration does not automatically bring employees’ contracts to an end. They will continue until clear decisions are made.
An Administrator may choose to “adopt” the contracts, essentially stepping into the shoes of the employer to run the business.
Employees should know after the first couple of weeks whether an Administrator will “adopt” their contracts. If they do so employees wages and salary, including holiday pay, sick pay, payments in lieu of holiday and contributions to occupational pension schemes will be given precedence for payment.
Employees should also be aware that the Administrator, having stepped into the shoes of the employer, can do all the things open to any employer, including utilising the Government’s job retention scheme by furloughing employees.
Where the contracts have been adopted there is every hope that the business can continue to trade and all employee liabilities met without too much difficulty, including notice and redundancy payments.
In the event that is not the case, employees may look to HM Revenue and Customs to meet statutory payments, such as sick pay or maternity pay.
Employees should however be aware that unpaid wages accrued prior to the Administration will only rank as an unsecured claim. The National Insurance Fund also guarantees payment of a basic minimum of certain employment debts.
Given the potential limitations, employees should weigh up the viability of payments being made before embarking on litigation.
On a personal note I hope the Topshop brand can be saved along with the jobs of its staff, and they will be around to create more Christmas memories for others in years to come.
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