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Lloyds/Sainsbury’s enhanced redundancy claims update – February 2024

The PDA has issued a further update for those members that are former Sainsbury’s pharmacists taking legal proceedings against 'LloydsPharmacy' to secure an entitlement to enhanced redundancy payments.

Wed 28th February 2024 The PDA

Following the last update issued on 26 January 2024 a further preliminary hearing to decide procedural issues was scheduled to take place on Wednesday 21 February 2024. Unfortunately, this hearing was postponed at the last minute by the Employment Tribunal service due to a lack of judicial resources and it has now been relisted for a date in April. The PDA knows that impacted members will be anxiously waiting for news from the hearing and this delay will be a further frustrating development.

The PDA had instructed specialist Counsel to attend the hearing who were fully prepared to deal with the outstanding issues, after the Liquidators had given consent to Mills & Reeve solicitors to continue to represent the company formerly known as Lloyds Pharmacy Ltd against which the claims were originally brought.

The PDA lawyers had previously asked the liquidators to confirm if the company had business indemnity insurance that would cover any successful claims for compensation. The liquidators have now confirmed that no such insurance is in place and therefore this option is not available to pursue.

The PDA team shares the frustration of the pharmacists, and the other creditors in the pharmacy sector that are impacted by the financial failure of the former Lloyds Pharmacy limited (now renamed as Diamond DCO Two limited). Other parts of what was previously ‘McKesson UK’ continue to trade and some of those who previously led and made decisions at LloydsPharmacy continue to occupy senior roles in the sector. However, the liability for these employment claims is with Diamond DCO Two Ltd which is now insolvent.

The PDA’s understanding of the financial data suggests that the amount owed to unsecured creditors is in the region of £400 million with only £800,000 available for distribution. If this is correct, then even if the claims for enhanced redundancy are permitted to continue and if they are ultimately successful at an Employment Tribunal hearing, in practice the claimants may at best only be able to recover a very small fraction of the value of their claim. Along with the other unsecured creditors, the PDA believes that when trying to enforce the payment of any successful Tribunal award, the claimants would only be able to recover in the region of two pence for every £10 awarded. For example, a successful claimant awarded £10,000 compensation by a Tribunal would only be able to recover £20.

Since the acquisition of McKesson UK by Aurelius, the pharmacy regulators, GPhC and PSNI, and the four national NHS bodies that are responsible for community pharmacy services have observed the steady decline of the LloydsPharmacy network, which was regularly highlighted by the PDA and pharmacist community. There is no suggestion of any unlawful behaviour by the company; unfortunately politicians, the NHS and pharmacy regulators all appear powerless to prevent the demise of a well know high street pharmacy chain, with the associated disruption to patient access to healthcare and pharmacy services.

Aurelius also acquired The Body Shop in November 2023, another well-known High Street brand. The Body Shop International Ltd entered administration on 13 February 2024.

The PDA continues to believe that the former Sainsbury’s employees who were made redundant due to the closure of the pharmacies inside those supermarkets are entitled to the enhanced redundancy terms they enjoyed whilst working for Sainsbury’s. However, 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.

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.

Following the preliminary hearing in April, the PDA will undertake a review of the outcome and provide individual updates to those who are part of the group claim.

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The Pharmacists' Defence Association is a company limited by guarantee. Registered in England; Company No 4746656.

The Pharmacists' Defence Association is an appointed representative in respect of insurance mediation activities only of
The Pharmacy Insurance Agency Limited which is registered in England and Wales under company number 2591975
and is authorised and regulated by the Financial Conduct Authority (Register No 307063)

The PDA Union is recognised by the Certification Officer as an independent trade union.

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