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    5. Taxpayers will pay for Body Shop staff reductions


    Taxpayers will pay for Body Shop staff reductions

    The collapse of the Body Shop has forced a number of the chain's landlords to prepare for closure. Photo: Leon Neil/Getty Images Europe

    Taxpayers will be forced to pay out millions of pounds to sacked The Body Shop staff as administrators oversee a radical restructuring of the collapsed chain.

    Staff at the company have been told to make claims through a government-backed service payments upon dismissal. if they get fired. It is being funded by National Insurance contributions.

    It comes after administrators announced earlier this week that almost 100 stores would be closing, which would mean the loss of at least 300 jobs.

    A number of stores, including the flagship store on London's Oxford Street, which was refurbished five years ago, were closed immediately after The Body Shop was taken over by its owner, German store buyout company Aurelius.

    Details of The Body's Shop's restructuring and redundancy payouts were given to staff during a video call on Tuesday, during which FRP administrators said the company's presence on the 198-store high street was no longer viable.< /p>< p>It is not yet known which locations will remain open as the company employs more than 2,200 people across the UK.

    Earlier this week administrators announced the closure of almost 100 stores, which will mean the loss of at least 300 jobs. Photo: Jeff Pugh

    Only employees who have worked for the company for two years or more are entitled to redundancy benefits. Payments are capped at approximately £643 per week before tax. This means that the losers will be the company's higher-income employees, such as those at the head office.

    The impact of the cuts was also felt by employees with company cars, who were told their insurance would expire overnight.

    The Body Shop administration will tighten control over Aurelius, which bought the retailer from Natura for just £207 million. three months earlier.

    Aurelius became the retailer's main creditor before its insolvency and is believed to have a good chance of reclaiming The Body Shop's debt-free assets unless a bidder emerges. He will not be responsible for redundancy payments.

    His seniority among creditors means Aurelius will control the future of the company unless it is sold.

    Aurelius is already facing questions about over alleged £3 million unpaid payments to a group of around 20 former employees. in January, which was reportedly part of a price reduction agreement with Natura.

    It is understood Aurelius contributed less than £20 million to the deal as Natura sold the business at a significant discount to the £870 million it paid in 2017.

    A person close to Aurelius has denied the allegations in financial engineering and stated that payments to former employees would be treated by the administrator as any other financial liability.

    In addition to jeopardizing the future of hundreds of jobs, the collapse has also forced some of the chain's landlords to prepare to close. In 1976, The Body Shop helped popularize ethical beauty products throughout the UK. Photo: Mirrorpix/Huddersfield

    The Body Shop, founded in 1976 by environmental activist Anita Roddick, helped popularize ethical beauty products across the UK.

    However, in recent years it has struggled to keep up with new competitors such as Lush and Rituals. .

    It is understood that after completing the acquisition in January, Aurelius discovered that The Body Shop's finances were in much worse shape than expected, prompting urgent discussions about what went wrong during the process due diligence of the company.


    Peter Wood, one of the organizers of the deal, has since parted ways with Aurelius.

    Jonathan De Mello, retail consultant and CEO of JDM Retail, said the current administration process could allow Aurelius to “get back a significantly more valuable business than the one they acquired from Natura at a significantly reduced price several months ago.”

    He said: “The business will become significantly leaner and more profitable as debts are paid off, stores are closed and property costs are reviewed downwards.”

    After the store closures were announced on Tuesday, administrators said : “These swift actions will help breathe new life into the iconic The Body Shop brand and give it the best platform to achieve its ambitions. to become a modern, dynamic beauty brand capable of returning to profitability and competing in the long term.”

    Previously they said The Body Shop was struggling after a “long period of financial problems under its former owners.” p>

    FRP declined to comment on redundancy payments.

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