Friday 18 January 2013

Why I Feel Sorry For HMV Staff Going through Administration

The media is alive with talk about HMV, yet another retailer to bite the dust, or rather, have the administrators called in.

Whilst everyone is worried about gift vouchers they may have received for Christmas, my first thoughts are with the staff.

Having personally been made redundant in July 2012, as the result of administrators being appointed in May, I know what a truly awful time it is, where the goalposts change on a daily basis. Actually scrap that, they sometimes change on an hourly basis. God forbid you get quoted on something which was FACT an hour ago...

For example, when Deloitte were appointed for Comet, they at first refused to accept gift vouchers, effectively temporarily suspending them and later - after bad press - changed their minds, as is explained here in the Sun: Comet U Turn over Vouchers. With HMV having MILLIONS outstanding in vouchers I don't know if they can afford to be so generous but only time will tell.

The thing with administrators is, they ARE ocassionally generous, which lulls one into a false sense of security. But they do not do it from the bottom of their hearts; they are generous at times to secure goodwill, but only when it is intrinsically linked to incoming cash, because during administration CASH IS KING!!!!!

Work in a store where there is a profit, or one readily available after a few tweaks, and your job is safe, for now!

Work in an unprofitable store, and you could find yourself being given your marching orders. Yes, "wages" are protected, but they can make you get it from the Insolvency Fund which can take 6 weeks - some miss out on pay day.

I saw all sorts during our administration, and I am surprised I am not in possession of a full head of grey hair.

Ordinarily, your HR Manager can answer all of your questions, but the thing is, Insolvency Law trumps Employment Law, which is a hard pill to swallow, and some things are at the administrators discretion. Even then, someone representing the Administrators, even employed by them, a fully qualified insolvency practitioner, does not necessarily have the final say; that lies with the NAMED administrators, the individuals who were named at appointment. So when you are really relying on a decision make sure you get it from the horse's mouth.

Also they play on words. What you take from a comment, you later realise you shouldn't have done, when the truth comes out, i.e. I was on a conference call where the words were said "everyone will be paid at the end of this month" - it was said by THE administrator so we took it as gospel, but in a play on words we later discovered it only applied to the participants on the call, who had cleverly been chosen for just that reason.

The first employees to suffer seem to be those who have already resigned. The administrators have nothing to be gained by paying them for working their notice. If that is you, proceed with caution. Come pay day they could make you get your outstanding salary from the Insolvency Fund.

If you are a high earner or anyone earning more than £450 a week, again proceed with caution, as your outstanding holiday, notice period etc... is calculated at that statutory rate. Yes the administrators can choose to pay your normal salary, while you are still working, but stay at your peril as you will not be getting your ordinary contractual notice period, neither in time (number of months) or rate of pay per week.

Get advice from an employment lawyer and you will find that it is over-ruled by Insolvency Law.

Yes, you may be on a 3 or 6 month notice period, but you'll find that the Administrators are within their rights to breach your contract and an employment lawyer won't tell you that.

Yes you can be kept on long enough that the Administrator ADOPTS your contract, (14 days after their appointment) but EVEN THEN, they are not obliged to give you your contractual notice period or payment in lieu of notice. The contractual notice will become statutory both in time and amount.

So when you get the chop, you can claim, from the government, outstanding wages, holiday pay, redundancy pay, and notice, but they are all calculated at the statutory rate, which if you had a lot of holiday, enhanced redundancy and a great length of notice period for either seniority or length of service, you see yourself making a BIG LOSS.

So be loyal, but draw a line, as to how far you will go, and prioritise your future, saving your energy for looking for new opportunities.

There are lots of helpful websites, even government ones that say things like this:

If your employer is ‘insolvent’ this means it can’t pay its debts. You have rights if this happens and can make a claim for any money you are owed.

This is NOT helpful, (1) because there WAS enough money in our company account to pay us so the first sentence is NOT strictly true as creditors come first not employees as is often misunderstood and (2) because you can't claim for "any" money you are owed. I waved goodbye to a nice healthy 3 month notice and had it replaced with 6 weeks statutory notice at the government rate, which last year was £430 (yes the increase to £450 is pitifull).

Money Saving Expert has written a fabulous Q and A but I find it is written for the consumer and doesn't really help with staff questions. When I was looking for info, I didn't really find a reliable source. Each administration and each administrator is slightly different, so keep your wits about you and remember everything I have said above.

There are some odd things about administration, like the fact that the difference between £450 a week and your salary, for outstanding holiday pay IS a protected debt which one gets MONTHS edit: YEARS (in my case) down the line when the accounts have been finalised, but the difference between £450 and your weekly rate of pay for the notice period is an unsecured debt, which means the likelihodd is that you'll never see it. This particularly burns when you have access to the accounts and know that if the law was written differently you could have all your dues, contractual in full, PAID, and is particularly galling when you felt sorry for colleagues being made redundant months before, when you are getting a quarter of what they did.

Talk to friends and family and they'll think your money is protected, they won't quite understand that an insolvency/liquidation redunancy is way worse than an ordinary one, as the myth is often circulated that employment rights are protected in an administration - yes but ONLY to a statutory level!!!!!

It's far from a golden handshake; more a plastic watch obtained from a vending machine,

If you work for HMV or Blockbusters, most importantly, focus on your future.

I know I haven't covered every scenario above, but having gone through the process AS a HR Manager at the sharp end of everything that took place, I can answer your questions, so if you work for HMV or Blockbusters please feel free to leave me a question in the comments.

Liska xx


  1. Having gone through redundancy whist pregnant I really feel for the staff too. There is not any clear advice out there for those facing redundancy when support is badly needed

    1. It must be awful going through it whilst pregnant. Sorry honey x

  2. I must admit that I didn't understand what was so terrible when you were suffering through this last year. I'm glad you wrote this. We all need to understand as, sadly, it may be happening a lot more often over the next few years.

    1. It was pretty awful, as for the redundancies 6 months before I had done LOTS of overtime to ensure that they all got every penny that they were owed, and my reward in staying to the end, to pack up literally the last paperclip was that I got less than half of what they did.

      The common myth with the man in the street is that employee's rights are protected in an administration, but there were lots of people not paid, and those of us who were, got a lot less than we would have in a normal severance that does not involve insolvency.

      It is much worse when you have access to the figures and know exactly what went on :-(

      Thanks for your lovely comment.

      Liska xx


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