Posted on 6.1.15 by David Walton
It’s been a sobering start to 2015 for employees of our north-west businesses with the recent announcements leaving jobs at risk at Bury-based Bank Fashion and Cheshire-based Johnsons the Cleaners.
However, the two announcements arise from two very different financial positions. Bank has appointed administrators on the back of its decision that “a solvent turnaround would not be possible”. The administrators have confirmed that all stores remain open as usual and that they have been approached by interested parties but, despite those reassurances, it will be a worrying time for all 1555 employees given that the business has apparently been making losses for “a number of years”. So, although no stores have been closed yet, if a solution is not found, jobs will be at risk.
On the other hand, Johnsons have announced plans to close over a third of its existing dry-cleaning stores with jobs apparently at risk despite there being no suggestion of any issue with solvency – far from it, given that 2014 results are anticipated to be in line with expectations and contributions from elsewhere in the business are expected to be significantly ahead of previous year figures.
Neither business will want to prejudge what’s going to happen (nor do I), but in the event there are redundancies from one or both, it will just go to show that redundancy situations can arise within strong businesses (for example by way of “rationalisation”) just as much as they can within failing ones. We employment lawyers regularly see redundancies as part of efficiency drives in highly competitive businesses yet the need for those redundancies is generally no more challengeable than those in a failing business. It’s worth remembering that employment tribunals rarely concern themselves with the commercial rationale for a redundancy exercise – they will be far more interested in why one particular employee is selected over another and whether there were any suitable alternative roles which should have been offered.