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Toys R Us. Maplin. New Look. The husks of once-famous high street names. But what went wrong? Was it the invidious influence of the internet? Shoppers using physical stores as a test bed for purchases which eventually end up online?

Amongst all this speculation, nobody’s asked the people who might know best – those who worked for these business and witnessed, first hand, their demise.  Front line employees are the budgies in the cage for a company’s performance. They sense that things are going wrong long before the accountants in head office.

But more than that, they are the people best placed to find a way to fix things. These are the people, after all, who speak to customers day in, day out. They know about changing consumer habits and market trends. They’re also likely to have the best new product ideas and know which new processes or procedures will work or not.
However, most employers aren’t interested. It’s a top down approach- our way or the high way. You stack the shelves- we make the decisions.
Unfortunately, there’s a not a lot employment law can do to intervene. The general rule is that if an employer wants to run their business unreasonably, irrationally or in a way that is destined to fail, then there’s nothing anyone can do to stop them.

But there are exceptions. When things get so bad that it looks like the doors might have to shut for good, employment law should have a say. The rules demand that where an employer is proposing to dismiss 20 or more staff by reason of redundancy then they must consult with their staff about ways of “avoiding the dismissals” and keeping the business alive.
Why does the law say this? The answer is clear: where senior managers have failed, it’s the employees who are best placed to come up with the creative, innovative ideas to save a failing business. That’s why Parliament forces employers to speak to their staff before pulling the plug.
However, like most progressive regulation, it is rarely, if ever, followed. Directors rarely tell their staff they are in financial trouble and, even if they do, never ask them how they could help to turn things around. As a result, employees who are made redundant following the insolvency of their business are normally entitled to an additional £4000 in compensation on top of their redundancy pay. This legal claim is called a “Protective Award”.

Of course, this extra money is rarely talked about. Those who manage the insolvency are more interested in their own fees than securing extra money for redundant staff. But the compensation can easily add up. For example, employees of Toys R Us are likely to be entitled to an extra £10 Million in compensation as a result of the way they were made redundant.
Of course, none of this is a consolation for those who’ve lost their jobs. Each of them would prefer that their employer had listened to their suggestions and tried to save the business.

But worse of all, it’s not even business owners who end up shelling out for this compensation. It’s the government-funded insolvency service: in other words,  you and I.  That’s why Thompsons say the sooner company directors start complying with the law, listening to their staff and working with trade unions, the better off everyone in society will be.
If you’ve recently been dismissed, then “Talk to Thompsons” about how easy it is to get the extra compensation you are due.

Blog by David Martyn, Employment Lawyer

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