Subscribe For Free

Phones 4u staff likely to miss out on redundancy payments

Alex Yau
September 16, 2014

Taxpayer may be left to foot bill if company if no buyer is found by PwC

Phones 4u staff with less than two years service are likely to receive no redundancy payment, following the appointment of PricewaterhouseCoopers (PwC) to find a buyer for the stricken firm.

In a further kick in the teeth for staff, who found out they were losing their jobs via news reports, there is no contractual obligation for employers to make redundancy payments to employees with less than two years of service.

It is believed that many members of the retailer’s staff fall into this bracket.

If the company is found to be insolvent and no buyer is found, then the Insolvency Service will make payments through the Redundancy Payments Service (RPS). When Comet collapsed in December in late 2012, the RPS made payments totalling £23.2 million to staff.

Although Phones 4u’s owner, private equity firm BC Partners, said in its original statement that it would continue to pay staff, PwC said that talks with potential buyers would determine whether arrears of wages would be paid.

A spokesperson for the government department confirmed that they were in discussions with PwC over its intentions for Phones 4u’s 5,595 staff. PwC are required by law to inform the government on their intent to save jobs or make redundancies.

While there has been no official word from administrators on a potential buyer, social media is awash with comments from former staff, saying they have lost their jobs.

Employees must be served with a redundancy letter to process a claim for payment from RPS funds. They will be required to fill out a form and provide official notification of their redundancy

The maximum payment available under the scheme is £464 per week and the government aim to process most claims within three weeks.

Employees must have a minimum of two years service to be entitled for a payment through the scheme. If eligible, 0.5 weeks pay will then be paid for each full year of service completed before the age of 22, one weeks pay for each year between the age of 22 and 41, and 1.5 weeks for each year they were employed over the age of 41.

This means that a 25 year old on £18,000 per year with three years of service would receive just £692. How much is paid for each employment year depends on the person’s weekly wage at the time of redundancy.

Phones 4u employees can calculate their potential redundancy payment here.

Employees who find alternative employment prior to receiving their redundancy notice would not be entitled to any compensation for the loss of their role at Phones 4u.

Share this article