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‘No realistic prospect’ of proper payout in Lloydspharmacy redundancy row

The Pharmacists’ Defence Association (PDA) has warned that there is “no realistic prospect” of a decent payout for former Lloydspharmacy employees who worked in Sainsbury's stores, even if they were to win their ongoing redundancy dispute in court. 

In July, the pharmacy union announced that “almost 100” former Lloydspharmacy workers in Sainsbury’s stores were taking the multiple to court in an effort to access enhanced redundancy benefits, after first announcing the dispute in February last year.

However, C+D exclusively revealed in November that Lloydspharmacy had confirmed it had exited the high street for good and in January reported that the multiple had gone into liquidation - with almost £300 million owed to creditors.

Read more: Lloydspharmacy goes into liquidation with £293m owed to creditors

In an update issued yesterday (February 28), the PDA revealed that the now-defunct multiple’s liquidators have confirmed that Lloydspharmacy does not have business indemnity insurance in place that would cover any successful compensation claims.

And it said that its analysis of the financial data suggests that even if claimants are successful at an employment tribunal hearing, they could “at best” only be able to recover “a very small fraction” of what they are owed due to Lloydspharmacy’s liquidation.

Read more: Ex-Sainsbury’s Lloydspharmacy workers head to court over redundancy benefits

The PDA believes that claimants trying to enforce the payment of any successful tribunal award would “only be able to recover in the region of two pence for every £10 awarded”, it added.

This means that a successful claimant awarded £10,000 compensation by a tribunal would only be able to recover £20, it said.

“The insolvency has materially changed the viability of the claim as it now appears there may be no realistic prospect of recovering more than negligible levels of compensation, should the claim be allowed to continue by an employment judge and crucially, the claimants ultimately win their case,” the PDA added.


“No suggestion of unlawful behaviour”


The pharmacy union said that it “shares the frustration” of pharmacists and other creditors in the pharmacy sector that are “impacted by the financial failure” of the former Lloydspharmacy.

It noted that other parts of the business “continue to trade and some of those who previously led and made decisions at Lloydspharmacy continue to occupy senior roles in the sector”, although “liability” for the employment claims remains with the insolvent company.

But it stressed that there is “no suggestion of any unlawful behaviour by the company”, adding that “politicians, the NHS and pharmacy regulators appear powerless to prevent the demise of a well-known high street pharmacy chain, with the associated disruption to patient access to healthcare and pharmacy services”.

The company’s liquidators have given consent to Mills & Reeve solicitors to represent the company formally known as Lloyds Pharmacy Ltd against which the claims were originally brought, it added.


Tribunal outcome not guaranteed


The PDA said that it “continues to believe” that former Sainsbury’s employees who were made redundant due to their supermarket pharmacies’ closures “are entitled to the enhanced redundancy terms they enjoyed whilst working for Sainsbury’s”.

But it added that “no employment tribunal outcome can ever be guaranteed and the prospects of success in this case have always been finely balanced, due to the specialised and complex area of employment law covering the dispute”.

And it said that a preliminary hearing due to take place last week (February 21) was “postponed at the last minute by the employment tribunal service due to a lack of judicial resources”.

“Impacted members will be anxiously waiting for news from the hearing and this delay will be a further frustrating development,” it added.

The union said that it had instructed specialist counsel to attend the postponed hearing who were “fully prepared to deal with the outstanding issues”.

The PDA added that the hearing has been rescheduled for “a date in April” and that after it has taken place, it will “undertake a review of the outcome and provide individual updates to those who are part of the group claim”.

C+D approached Hallo Healthcare, which had owned Lloydspharmacy, insolvency firm Turpin Barker Armstrong (TBA), which was appointed as liquidator of the multiple, and Mills & Reeve solicitors, for comment.


How did we get here?


The workers were transferred from Sainsbury’s to Lloydspharmacy in 2016 under Transfer of Undertakings (Protection of Employment) regulations (TUPE).

But when they were made redundant by Lloydspharmacy after the multiple elected to shut all of its 237 branches in Sainsbury’s stores, they only received statutory redundancy benefits - “the bare minimum…in law” - rather than the enhanced redundancy benefits that they were entitled to as Sainsbury’s employees, according to the PDA.

In May, Lloydspharmacy turned down the PDA’s initial collective grievance on redundancy terms and the trade union moved to escalate the dispute to an internal appeal.

Read more: Lloydspharmacy confirms 'successful sale' of all community pharmacies

But internal recourse for the workers has also been exhausted, after the multiple announced in June that it had rejected the workers’ appeal on the matter.

At the time, the multiple ruled that the workers “do not have a contractual right” to enhanced redundancy payments and confirmed that it would instead offer only statutory benefits.

Meanwhile, the PDA also launched a legal process on behalf of pharmacists formerly employed by Lloydspharmacy in September after some of its members reported “changes to working practices” following the sales of pharmacies in the Lloydspharmacy estate in which they work.

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