Nursery Today magazine

Mothercare staff to receive no redundancy pay

Employees advised to apply for statutory redundancy as UK business collapses – though bosses will keep bonuses of more than £550,000 paid just months before

Mothercare staff have been told they will receive no redundancy pay as the nursery retailer closes all 79 stores in the UK. The retailer is currently running a sale and will liquidate all stock to pay off business debts – but staff will see none of it in compensation. Instead, reports say workers have been pointed to a government website and advised to apply for statutory redundancy, usually limited to a week’s pay per year of employment.

PwC had informed head office staff in a meeting last Wednesday that their contracts were terminated the previous day and they would not receive wages at the end of the week, their scheduled pay day. It is understood that in-store staff who were staying on during the fire sale were paid in full.

Last week, national papers reported Mothercare bosses had received combined bonuses of more than £550,000, just months before the chain collapsed. Chief executive Mark Newton-Jones was awarded £158,000 and Clive Whiley, the chairman, earned £240,000. Both are understood to have reinvested around £50,000 of their bonuses for 500,000 shares in the business as part of a fundraising effort to stabilise Mothercare’s international business.

Last week Mothercare took the decision to cease all trading in the UK, shutting all bricks and mortar stores and shutting down its website. Around 2,500 staff will be affected by the collapse, with just a skeleton staff of around 50 remaining on at the Watford head office to oversee the operation of its profitable overseas franchise business.

“Like many other retailers, Mothercare has been hit hard by increasing cost pressures and changes in consumer spending,” said Zelf Hussain, joint administrator and partner at PwC.

Rival nursery retailer Mama’s & Papas followed Mothercare into collapse on Friday, closing six stores and making more than 70 staff redundant. The remaining 21 stores will remain open, though 54 jobs at Huddersfield HQ will be put under review.

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