Sudden Closures, Legal Risks and Lasting Damage: What the BrewDog Redundancies Reveal About Hospitality’s Crisis Management

Sudden Closures, Legal Risks and Lasting Damage: What the BrewDog Redundancies Reveal About Hospitality’s Crisis Management

BrewDog’s decision to close 10 UK bars last month – including flagship sites in Camden and Aberdeen – has prompted widespread scrutiny, with reports suggesting employees were given three days notice of the intention to close their workplace. While the public and media backlash has been immediate, the incident highlights much broader and growing challenges across the UK hospitality sector.

As economic pressure intensifies, this situation offers a clear warning: how employers manage workforce change can be just as important as the change itself. For businesses under financial strain, restructuring decisions must be handled with both legal rigour and commercial foresight.

A Sector Under Pressure

The hospitality industry continues to face unprecedented strain. Inflation, rising energy bills, chronic staffing shortages and squeezed consumer demand are hitting margins and forcing difficult decisions across the board.

Recent analysis reveal:

• A 20% increase in restaurant and bar insolvencies last year
• Operating margins down compared to pre-pandemic levels
• 1 in 4 hospitality businesses now reporting cash flow difficulties according to UK Hospitality.

Closures are unfortunately becoming more frequent. But the BrewDog example poses a critical question: can employers avoid the legal risks and reputational fallout that may come from mishandling redundancies?

BrewDog: A Case Study in Crisis Mismanagement

The fallout from BrewDog’s announcement demonstrates what can happen when legal and procedural safeguards aren’t prioritised, as reported in The Guardian’s coverage.

Key Legal Issues:

• Insufficient notice: Whilst a 14-day consultation process may tick the legal box, providing workers with three days’ notice of the closure of their may fall short of the requirement to properly warn affected staff.

Commercial Consequences:

• Public backlash: #BoycottBrewDog trended online within hours
• Recruitment impact: Future talent may view the company as an unstable employer
• Investor confidence: Poor handling raises questions about leadership and governance
• Regulatory exposure: A spotlight now shines on BrewDog’s internal processes from enforcement bodies

Best Practice for Hospitality Employers: A Legal Framework for Responsible Restructuring

At Primas Law, we’ve supported many hospitality operators through difficult restructuring decisions. When redundancies are necessary, it’s critical to manage them strategically and lawfully.

1. Pre-Decision Analysis

• Explore alternatives: Salary adjustments, shift reductions, or reduced hours may help avoid compulsory redundancies
• Review business justification: Ensure closures are based on robust financial modelling
• Risk mapping: Identify potential exposure to employment claims and reputational harm early

2. Compliance Essentials

• Meaningful consultation: Engage in genuine two-way communication — both individually and collectively if applicable
• Objective selection: Use fair, transparent criteria for selecting roles at risk
• Consider redeployment: Actively assess whether affected staff could move to other roles

3. Communication Strategy

• Map stakeholders: Plan communications with employees, customers, suppliers and the media
• Be consistent: Ensure messaging is clear and rooted in business necessity
• Offer support: Career transition help, references and open dialogue all reduce risk and improve morale

4. Documentation

Maintain a full paper trail, including:

• Rationale for closure decisions
• Notes from consultation meetings
• Selection criteria and assessments
• Evidence of redeployment efforts

This documentation is vital in defending claims and demonstrating legal compliance.

When Employment Issues Intersect with Insolvency Risk

The BrewDog situation also raises a broader issue: does using redundancies as a restructuring tool in isolation solve the underlying financial problems of the business?  Are there wider creditor issues or cashflow pressures that the business should also address to return to profitability?

At Primas Law, our Corporate Restructuring & Insolvency team works alongside our employment lawyers to support clients in distressed situations to achieve the best outcome for all stakeholders.  Early advice should be taken to ensure that losses to creditors and potential personal liability of directors of companies facing insolvency are minimised.

Key areas where employment and insolvency law overlap include:

• Pre-insolvency restructures:
  • Redundancies must be legally compliant even if intended to avoid formal insolvency.
  • Mishandled redundancies can compound financial challenges and even accelerate insolvency.

• Insolvent restructures:
  • Employee liabilities can affect valuations, disposals and buyer interest in insolvent business sales by Administrators
  • TUPE complexities: Purchasing or transferring the business and assets of an insolvent company can lead to the automatic transfer of employees together with associated liabilities and requires careful planning

📌 Learn more about our Corporate Recovery & Insolvency Services

Employee Rights in Hospitality Redundancies

For hospitality staff affected by redundancy — especially sudden or unplanned — the law offers clear protections.

Your rights include:

• Consultation (individual and, where relevant, collective)
• Statutory redundancy pay (if you’ve worked 2+ years)
• Paid wages (including overtime and holiday pay)
• Proper notice (based on length of service)

Common employer mistakes:

• Insufficient notice
• Failure to consult
• Discriminatory selection
• Non-payment of entitlements
• Ignoring redeployment obligations

Legal remedies:

• Unfair dismissal claims
• Breach of contract
• Protective awards (up to 90 days’ pay) for consultation failures
• Discrimination claims if bias played a role in selection

Our team advises employees on their legal rights, negotiates settlements and supports tribunal claims where necessary.

Looking Ahead: What BrewDog’s Mistake Could Signal for the Sector

The hospitality sector will continue to face economic volatility. Operators that take a short-term approach — cutting corners on legal process — may face steep costs in tribunal claims, reputational loss, and regulatory action.

Those that take early legal advice, prioritise proper process and plan communications carefully will be better placed to navigate uncertainty with minimal disruption.

Facing Difficult Decisions?

If you’re a hospitality operator considering site closures or workforce changes, Primas Law can help. Our Employment Law and Corporate Recovery & Insolvency teams provide sector-specific advice that protects your business – and your reputation.