Union Calls for Priority for Redundancy Pay16 September 2009
UNITE the Union is calling for workers’ redundancy payments to be given priority when a business goes into administration.
The union's call follows their backing of a group of 61 members who despite being awarded £2.2m in redundancy payments and compensation by Glasgow and Newcastle Employment Tribunals will only see a small percentage of the money awarded because their former employers went into administration.
The group of electricians, construction operatives and plumbing operatives were made redundant by employers Syncro Ltd and Syncro Capital Ltd, in 2007.
Syncro was a subsidiary of the Co-operative Group and was sold as a going concern to Aston ventures in February 2006. Due to financial difficulties it was placed into administration in June 2007.
The company employed 44 Unite members at its Gateshead site who were awarded an average of £32,000 each after a Newcastle Employment Tribunal ruled in August 2008 they were unfairly dismissed.
A Glasgow Employment Tribunal has now ruled that 17 members at the Paisley depot were also unfairly dismissed and were awarded an average £42,000 each.
Many of the members had worked for the firm for 20 to 30 years.
The companies are now in administration and the employees will never receive either their redundancy payments or unpaid wages. Instead they will receive a small sum in statutory compensation from the Redundancy Payments Office.
Redundancy payments are not entitled to priority in an administration and are only paid once all the company’s creditors are paid. More often than not this means loyal staff end up losing out.
John Quigley from Unite said more must be done to protect workers’ wages and redundancy payments when businesses fail.
He said: “Both employment tribunals have ruled our members were treated appallingly and have ordered that they are paid their full redundancy, unpaid wages and compensation. And yet the decision isn’t worth the paper it is written on because after paying creditors there is no money left in the pot.
“What greater priority can there be in an administration process than full compensation for hard working employees? There is something wrong when banks and those trading with a company take precedence over workers. Unite will fight for a change in the law so that our members have the security of knowing they will receive their full redundancy should their employer go into administration.”
Unite instructed its lawyers Thompsons Solicitors to pursue compensation on behalf of its members after Syncro Ltd went bust in July 2007.
Syncro Ltd was originally part of the CWS Group and it carried out installations of building services for the Co-operative Group and a number of other organisations.
Part of Syncro Ltd was sold to Corunna Capital and re-named Syncro Capital but that also failed in October 2007.
The Unite members were not consulted on a round of redundancies in July, on the sale to Syncro Capital in August or on the redundancies in October when the firm went bust.
Brian Rushford, 59, from Byker worked for Syncro Ltd for 31 years. He said although workers were aware the firm had some difficulties they had no idea things were so bad.
He said: “The staff at Syncro Ltd have been through hell. We were loyal to the company but we were treated badly in return.
“Unite has worked hard to make sure we all get as much as we can out of the firm under the circumstances and we are pleased with the employment tribunal judgment. However in the end many of us are still short of thousands of pounds worth of redundancy pay after working many years for the firm. Our redundancy pay should have been a priority debt to the company.”
One former Syncro employee from Glasgow said: “The employees of Syncro Scotland, formerly known as CWS Engineers Ltd, were always comforted by the thought that if we were to be made redundant we were covered by the enhanced CWS redundancy package. In reality this has not been the case, Syncro folded before anyone knew what had happened and as a result they will now have to make do with the statutory government redundancy payment. Without the help from the union Unite and Thompsons we might have been left with nothing.”
Ranjit O’Mahony the legal representative at Thompsons Solicitors who dealt with the case on behalf of Unite said: “Innocent workers can ill afford to bear the brunt of mismanagement that leads to company failure. As the legal representative it is hugely frustrating to achieve the best possible judgment from the tribunal process but then see members left without their full damages. We will fight with Unite to see a change in the law.”