News analysis - Barkers Scotland
When news of the demise of Barkers in Scotland hit The Drum’s website there was a flurry of comments criticising the way the deal with Penna was handled. But what of the 40 people who lost jobs? And why did a once thriving business ultimately fail?
On the announcement of the acquisition of Barkers, Penna also announced that all jobs remaining at the company when it was acquired were safe.
Staff who lost their jobs are now having to seek legal aid without any redundancy pay. Those members of staff claim that talks were ongoing before they lost their jobs and feel they have been cheated out of their redundancy pay. It is understood that a law firm in England is willing to look at their case.
REDUNDANCY PAYMENTS
Gina Wilson, an employment lawyer at law firm MacRoberts, believes that statutory redundancy payments should be met by the Secretary of State where, in the event of an unfair dismissal claim being successful, a basic award of compensation should also be met.
However, should it be the case that TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) legislation is invoked then the Secretary of State would not be liable for such recompense, although it seems that this is unlikely to transpire.
The comment section of The Drum became one of the main places where the industry chose to react, with messages being posted which accused the main directors of Barkers, who kept their roles following the buyout, of mismanagement and Penna of leading the strategy to rid Barkers of its marketing and PR operations ahead of the takeover, leaving it to solely purchase the recruitment business. Such accusations prompted a response from Anne Riley, head of Penna’s recruitment communications: “As a managing director at Penna and as someone involved in this deal, I would like to make it absolutely clear that, contrary to the view of the previous posting, Penna was in no way involved with any redundancies undertaken by Barkers prior to our acquisition. We’re excited about the acquisitions made and look forward to developing the recruitment communications business in Scotland.” Her defence only fuelled the fire.
One online commentator, Ronaldo Zmba, responded with comments questioning the morality of the Barkers takeover, how it had left its former employees without work and the role played by Penna overall.
Zmba wrote: “Negotiations had been taking place for some time before Monday’s news, so the thought that Penna had a purely passive role is laughable. Indeed, passivity would still be no excuse; the knife taken to Barkers liability side of the balance sheet through the redundancies and non-fulfilment of contracts (media, etc) would presumably have made the deal sweeter for Penna, would it not? Indeed, I would hazard a guess that just such a purge (of outstanding pensions, maternity benefits, mortgage payments for the next two months, etc) would probably have been deal clinchers. Thus, the argument that Penna had no ex ante knowledge appears hollow.”
Others in the industry have said that Barkers relied on the public sector roster work too much and that its closure was simply as a lack of good business sense and not enough work, although The Drum understands that the advertising and especially the PR divisions were both ‘washing their faces’, which in the current climate is an enviable position for many in marketing.
The Drum has also been informed that ‘onerous leases’ were another reason for the company to seek the closure of its Scottish divisions as both leases came up for renewal.
UNSUSTAINABLE
Chris Wallace, the former MD of Barkers Scotland, says that the business model at Barkers was unsustainable and that for a long time, the Scottish advertising and PR divisions sustained the whole company, with recruitment being a loss-making enterprise.
“Barkers Scotland’s performance sustained the whole business for 12 years when London and the regions made a loss and the only thing which kept it going was that Scotland was well managed and handed over its cash each and every year.”
Wallace has previously said that he left the company having grown tired of working for a large group where “one of the pitfalls for working for a PLC was that you had all of the pitfalls and absolutely none of the benefits.” He says that is even truer now with the current hard times being faced globally, and that those working in Scotland, who were responsible for the survival of the business, have been left “high and dry”.