Tribunal awards £1.5m compensation to redundant paper mill workers

Taxpayers left to ‘pick up the tab’ after employers play ‘fast and loose’ with rules

A large group of paper mill workers made redundant with just one day’s notice have been awarded an average of £4,000 each.

A judgment from an employment tribunal in Dundee awarded 374 former employees of Tullis Russell Papermakers a total of £1.5 million, after it found that staff were not given adequate notice of redundancy plans by company directors.

Law firm Thompsons, which represented the workers, said that as more than 100 were losing their jobs, there was an obligation for them to be given at least 45 days’ notice. This was ignored, and so each employee was entitled to sue for compensation.

The employee-owned company went into administration in April 2015 after struggling with weak global demand for printed materials and the rising costs of raw material.

Blair Nimmo and Tony Friar of KPMG were appointed joint administrators of Fife-based Tullis Russell in April 2015. They issued a statement that month saying they had “no option” but to slash jobs.

As a result of the insolvency, the compensation payment ordered by the tribunal will be paid by taxpayers, the law firm said.

David Martyn, senior employment lawyer at Thompsons, said: “The taxpayer has picked up the tab because company directors have played fast and loose with the rules.

“Scotland has suffered from several mass redundancies in recent months. The more notice the workforce has to prepare for these devastating changes, the better they can organise their financial responsibilities to soften the blow.”

Martyn called for changes to protect taxpayers from being hit with bills such as this.

“We need the Scottish government to look at introducing a system of compulsory insurance for employers,” he said. “This would ensure that employees receive their full dues when a company goes bust and would avoid the need to take legal action.”

Tullis Russell was founded in 1809 and produced high-quality paper board for use in cards, covers and premium packaging. In the year to 31 March 2014, the company sold 126,000 tonnes of paper and board and had a turnover of £124.6 million.

However, it suffered a pre-tax loss of £3.4 million in 2013-14, and posted a cumulative loss of £18.5 million over five years.

KPMG said in a statement in April 2015: “Given the very difficult trading conditions and [the fact] that a sale process to seek a buyer for the company had not been successful, the administrators have taken steps to significantly reduce the company’s cost base while all options are considered.

“Unfortunately, this has resulted in 325 employees being made redundant with immediate effect. The remaining 149 have been retained to complete some orders.”

Nimmo said in April 2015: “While we will be exploring whether a sale of all or part of the business and assets of the company can be achieved, we have had to take steps to significantly reduce the company’s overheads.

“Unfortunately, with trading effectively ceasing, we have had no option but to reduce the size of the workforce. We will be working with government agencies to minimise the impact on employees.”

KPMG today declined to comment on the tribunal decision.

In October 2015, it was announced that the chief executive of Sports Direct, Dave Forsey, faced criminal charges after 200 workers at the brand’s USC site were given just 15 minutes’ notice that they would be losing their jobs.

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