Missguided workers are eyeing legal action against the fast fashion brand as it hashes out a sale.
After calling in administrators yesterday, the beleaguered online retailer is facing criticism from suppliers and former employees.
Law firm Aticus has said it is readying legal action after employees have claimed the redundancy process was not properly managed.
A successful challenge would mean employees would be entitled to claim a protective award of up to eight weeks’ worth of pay in compensation, with a cap of £544 per week.
An anonymous former employee accused Missguided of “no communication” to staff, over the past three to four weeks.
“The entire company had a conference call with 25 minutes notice, people who weren’t there or on annual leave missed it,” they added, speaking via the law firm.
Workers had been left “devastated,” with many finding out about their job losses through social media or “an emotionless automated” phone message, they added.
Employees had had “their lives turned upside down” because of the company’s collapse, Aticus Law’s employment law expert Mohammed Balal of Aticus Law said.
“While many people believe that since the business has entered administration there is nothing that can be done, those affected have the right to pursue a claim and seek compensation from the Redundancy Services,” he said.
While lawyers were “obviously in the very early stages” of working what had happened, Aticus’ clients have claimed proper protocol was not followed at Missguided.
Aticus is investigating whether there are grounds to claim for a protective award.
It has been reported that some 140 of Missguided’s 340 staff are at risk of redundancy while more than 80 people were immediately let go this week.
The Manchester-based firm had fallen foul of an “extremely challenging” retail trading environment, Gavin Maher of Teneo, said.
Fast fashion rival Boohoo is interested in snapping up the beleaguered brand, CityA.M. understands.
Administrators from Teneo have said there is “a high level of interest from a number of strategic buyers,” although it is not known who else may wish to buy the brand.
However, analysts have cautioned that Boohoo faces its own set of issues amid a turbulent time for fast fashion retailers.
“It’s a tough environment for fast fashion at the moment,” Fraser Thorne, chief executive of Edison Group, told CityA.M.
He added: “Boohoo’s results and reduced guidance are consistent with the wider headwinds buffeting the sector, which has also been hit by news of Missguided’s decline.”
A cost of living crunch presents a “turbulent and uncertain outlook” for consumer-focused firms, Thorne added.
It comes as fast fashion retailers like Shein have been lambasted for incredibly cheap prices, amid increased sustainability concerns from customers and investors
“With purses squeezed as the cost-of-living increases, customers are looking to make their money go as far as possible, and Shein’s ultra-low prices are competitive,” Thorne added.
However, fast fashion brands could seize an opportunity to “hold margin”, providing their environmental and sustainability credentials can woo Gen Z shoppers, the analyst said.