Taxpayers will foot bill for Body Shop redundancies

UK taxpayers will be responsible for the substantial bill to pay redundant staff from The Body Shop after the ethical beauty retailer entered administration on 13 February.

FRP Advisory has been appointed administrators tasked with overseeing a major restructuring of the collapsed chain, announcing the initial closure of almost 100 stores with the loss of at least 300 jobs.

It has yet to be determined which of the 198 UK store locations will remain open, with the business currently employing more than 2,200 people across the country.

Details of The Body’s Shop’s restructuring and redundancy payments were first relayed to staff in a video call on Tuesday, according to The Telegraph. FRP told them the retailer’s presence on the high street, which includes 198 stores, was no longer viable.

Company employees have now been advised by the government’s website GOV.UK to claim through its redundancy payments service if they are laid off.

Only staff who have worked for the company for two years or more will qualify for redundancy pay, which is funded using National Insurance contributions. But payments are capped at around £643 a week before tax, meaning that higher earners at the business, such as those in head office, will lose out.

The chain was placed into administration by its owner, German private equity buyout specialist Aurelius. It bought the retailer from Brazilian beauty giant Natura for £207 million just three months earlier, and has now come under intense scrutiny following the collapse. 

It emerged the new owner was also the retailer’s top creditor before its insolvency and is understood to be in lead position to reclaim The Body Shop’s debt-free assets if no bidder materialises. And it will not be responsible for redundancy payments.