British Home Stores Collapse: The Case for an Employee Derivative Claim

British Home Stores collapsed led 11,000 employees to lose their jobs and faced substantial cuts to their pension with a £571 million pension deficit. In light of the BHS scandal, the UK Government has proposed a set of corporate governance reforms to strengthen the employee voice. Although the government’s approach towards strengthening the employees’ protection is well intentioned, we argue that without providing a derivative claim right for employees, these measures will likely have little impact in practice. Hence we suggest that to safeguard the employees’ interest in the company and to enhance the overall protection of the company, in addition to the current proposed reforms, the standing for bringing derivative claims should be broadened to the employee’s representative.