Ted Baker, a once thriving British fashion icon, has called in administrators, threatening nearly 1,000 jobs across its European retail and online arm. Here, Beyond Corporate’s Adam Pavey and Molly Hackett look at what this means for the business’ employees, and any contracts in place with suppliers.

The future of Ted Baker’s employees across 46 stores is uncertain. ABG has confirmed that they are in “advanced discussions” with potential buyers of the Ted Baker business. Ted Baker’s acquisition by Authentic Brands Group (ABG) in 2022 for £211 million offered a glimmer of hope, but recent developments have dashed such optimism.

What does this mean for employees?

If the business is sold as a going concern, then it is likely that employment would automatically transfer to the new owner.  This is what is referred to as a TUPE transfer.  The “new employer” would then have to honour the terms and conditions of the transferring employees.  The employees would retain their original start date, rate of pay, holidays etc.

If there are any unpaid wages, then some or all of these amounts can be claimed through the Redundancy Payment Service.

As the employees are the subject of a transfer, they would be afforded protection against dismissal and contractual changes.

There are some circumstances in which the new employer can make changes to terms and conditions and also dismiss.  This is what the legislation calls an Economic, Technical or Organisational reason (ETO).  The law relating to ETO reasons if very technical and case law driven but in essence: –

Economic – Essential cost saving

Technical – Using new processes or equipment

Organisational – necessary changes to the organisation of the business.

It is important to note that how many employees would transfer depends upon which parts of the business are bought from administration.

TUPE applies to “affected employees” and so employees working in different parts of the business may not transfer.  This could happen for example if only the online part of the business is bought as opposed to the retail side.

The Administrator of the well-known brand Matchesfashion made nearly 300 employees redundant in the beginning of March.  This was to enable the business to continue trading.  If a buyer now steps in to buy what is left of the business, then those employees are likely to transfer to the new employer under TUPE.

If the business can be salvaged and a buyer found, then the new employer should inform and consult with staff about the transfer and any possible changes to terms and conditions.

Ted Baker’s commercial contracts:

Like all companies, Ted Baker will have a lot of commercial contracts in place with its suppliers and customers – it is reported that the retailer has several licensing arrangements in place across the US, the Middle East and Europe. To the extent that the UK operational arm, No Ordinary Designer Label (NODL) is the contracting party to any of these licensing deals, what will happen to these arrangements will depend on whether the contract allows the licensees to terminate for NODL entering administration or otherwise becoming insolvent. A licence does not automatically terminate by law on an insolvency event occurring.

As well as any right to terminate, there may also be provisions in the licensing agreements providing that any transfer of the licensee’s rights by the retailer through a deal with a potential business partner will be made subject to the existing licence. This would broadly mean that Ted Baker’s licensees would still benefit from the licence, regardless of an assignment of the rights taking place to an incoming partner.

[This blog is intended to give general information only and is not intended to apply to specific circumstances. The contents of this blog should not be regarded as legal advice and should not be relied upon as such. All liability is excluded Readers are advised to seek specific legal advice.]