400 ex-Phones 4u staff win £1.4 million redundancy pay two years after store closures
17 January 2017
More than 400 former employees of Phones 4u have won around £1.4 million in redundancy pay, more than two years after the firm went bust.
The money came after a number of ex-employees took the firm to an employment tribunal, because it failed to consult staff before making mass redundancies.
The sudden collapse of Phones 4u in September 2014 saw more than 550 stores close overnight and 2,500 staff made redundant.
Around 2,000 other staff were re-employed by Vodafone, EE and Dixons Carphone, which took over around 350 of the closed stores.
More than 400 former staff have now won Protective Award compensation, worth around £3,712 each, from the Redundancy Payments Service, funded by the taxpayer, to cover eight weeks, or 56 days, at the statutory level of £464 per week.
As the tribunal ruled staff were entitled to 90 days' redundancy pay, payment for the remaining 34 days will be worked out, along with payments to other creditors owed money, by Phones 4u's administrators, PWC.
Staff may only get a certain number of pence in each pound owed, along with other company and individuals owed money by the firm.
Under UK employment law, an employer must collectively inform and consult with employees when it proposes to make 20 or more employees redundant.
The Protective Award, made at the tribunal in Birmingham last week, is paid in addition to any redundancy and notice pay.
A spokesman for PWC said: “We can confirm that more than 400 former employees of Phones 4u Limited have been awarded 90 days’ redundancy pay (Protective Award).
“The Redundancy Payments service (Government National Insurance fund) will make payment for eight weeks (56 days) at the statutory level of £464 per week.
“Any outstanding difference of balance remaining is treated as an unsecured claim as part of the administration.
“We are pleased this case, which was uncontested by the administrators, is now concluded. We will continue to act in the best interests of all creditors.”
Taxpayers lost around £75 million from the collapse of Phones 4u, with the sum due to HM Revenue and Customs (HMRC) for VAT and corporation tax.
HMRC was among unsecured creditors owed a total of £168 million who received only 0.4p in the pound.
Bond holders in the firm, who were owed £430 million, received between 20% and 24%.
Photo from Philip Toscano / PA Wire