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Comet workers get payout after administrators 'flouted law'

Published: 16 June 2014
Shopworkers union Usdaw is calling for a reform of insolvency regulations, saying that administrators at Deloitte "deliberately flouted the law" when handling the collapse of Comet.
Comet workers get payout after administrators 'flouted law'
Private equity firm OpCapita bought Comet for £2 in November 2011 from Kesa, which also threw in a £50m dowry. However, one year later the electrical chain went down with the loss of over 6,660 jobs, and OpCapita walked away with £117m.

Now, an employment tribunal has ruled that the staff were not properly consulted about their redundancy, as required by law, and says some are owed redundancy payments worth three months' salary. Many more staff could also be in line for a payout. OpCapita will not be obliged to pick up the possible £25m tab, however, but the government.

The tribunal heard that some staff were made redundant either immediately after the consultation process or with no consultation.

Usdaw general secretary John Hannett said: "Yet again the taxpayer will have to pick up the bill for what is owed to sacked staff because administrators deliberately flouted the law. It's absolutely disgraceful that companies can get away with this sort of tactic in the 21st century.

"The poor behaviour of the administrators is reflected in the tribunal's decision to make a maximum award to the former staff.

"This area of law requires review because it is riddled with injustices for both workers and taxpayers and is stacked in favour of the financial and business sector. The government needs to end the perverse financial incentive for employers and administrators not to comply with legal obligations on collective redundancy consultation."

The tribunal highlighted the fact that partners at Deloitte had signed documents sent to business secretary Vince Cable stating that there would be no redundancies, while others involved in the administration were discussing cutting staff and closing the business. The tribunal said that that may have been a criminal offence.

Former directors at Comet also believed that its owners had planned placing the company into administration and asset stripping from the outset.

The law firm, The Needle Partnership, which represented the employees at the tribunal, said: "A corporate raid by private equity investors resulted in a 75-year-old British company being destroyed and nearly 7,000 jobs being lost."

Deloitte described the tribunal's ruling as "disappointing". It went on: "The Comet management team, administrators from Deloitte and our advisors worked tremendously hard under very challenging circumstances to provide the best possible consultation to the employees.

"Comet Group Ltd made significant efforts to consult with its nearly 7,000 employees across more than 250 sites during the administration, whilst a purchaser for the business was sought. Regrettably, it proved impossible to find a purchaser willing to save the business and all the employees ultimately had to be made redundant."

Comments

16 June 2014 01:01:00
By Robert Milliken
Can we just hope that a full investigation into this fiasco is carried out, and the people responsible are brought to book in a Court of Law.
Fines and Penalties to at least match the 25M redundancy costs.
Or am I being too hopeful?

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