Lloyds pharmacy in Sainsburys

Source: The Grocer

Lloyds closed all 237 of its concessions in Sainsbury’s branches in January 2023

Pharmacy workers behind a redundancy claim against Lloyds Pharmacy, made following the closure of its concessions in Sainsbury’s stores, fear they’ll lose any prospect of financial compensation after the pharmacy group entered liquidation.

The workers – who are being represented by the union Pharmacists’ Defence Association (PDA) – were all originally employed by Sainsbury’s before it sold its pharmacy sites to Lloyds in 2015. They began a group claim against Lloyds in July, arguing that they are entitled to enhanced redundancy packages based on their original contracts, after the Lloyds owner Aurelius closed all of its 237 Lloyds sites in Sainsbury’s stores in January 2023.

Last week Lloyds Pharmacy – which has been slowly divesting its store estate over the last year – entered a voluntary liquidation, owing a combined £293m to hundreds of creditors, the trade title Chemist + Druggist first reported.

Despite the amount, documents posted by the administrator to Companies House show that only £8.2m of assets will be available to preferential creditors.

Given the financial situation, the former Sainsbury’s workers believe they are unlikely to receive any financial pay should they win their claim, according to the PDA.

The claimants argue they are owed an enhanced redundancy package based on the terms of their original employment contract with Sainsbury’s. Some of the claims are thought to be for some tens of thousands of pounds, based on the discrepancy. Sainsbury’s has no involvement with the proceedings. 

Lloyds – which has since been renamed to Diamond DCO Two Limited – has maintained that the group has no contractual right to enhanced terms, and would only offer statutory benefits, per a report by Chemist + Druggist.

Read more: What Lloyds Pharmacy’s woes says about the state of British chemists

Earlier this month a preliminary employment tribunal hearing was set to hear the claims, however a 28-day hold was placed on proceedings following the news of Lloyds’ creditor voluntary liquidation.  

The claimants intend to proceed with the claim, however, a person with knowledge of the proceedings told The Grocer some members are resigned to any potential victory being more “moral” than leading to financial compensation. 

“The PDA recognises the surprise announcement that their former employer was being placed into liquidation will be a bitter blow for members, who will be concerned they may not now secure justice for the loss of their enhanced redundancy entitlement,” the PDA said in a statement following the initial preliminary hearing last week. 

“Due to the company decision to go into liquidation, the tribunal claims by members face some challenges ahead. Even if these claims proceed to a final substantive hearing and a tribunal upholds them, there is a very real risk the company will have no money to pay any compensation awarded.”

The PDA said it is also exploring whether it would be possible to receive compensation through indemnity insurance.

The rescheduled preliminary hearing is set to take place at the end of February.