More than 250 workers of the collapsed construction and outsourcing giant Carillion have been given the green light to seek compensation for the firm’s failure to consult with them before they lost their jobs.
Unite, which is representing 263 workers, said the Employment Appeal Tribunal (EAT) ruled that the compensation case could proceed, dismissing an appeal from Carillion.
In January the EAT rejected Carillion’s argument that “special circumstances” around the group’s collapse meant no protective awards should be made to workers for consultation failures that occurred. The builder appealed the ruling, with the EAT throwing it out last week.
“The decision of the EAT was very important as if the judge had ruled differently it would have made it far more difficult for similar cases to proceed in future, creating an additional barrier for workers seeking justice when companies collapse,” Unite said in a statement.
“While the victory is significant it is not the end of the battle to secure justice for the affected workers. A seven week hearing is scheduled for 2022, when the decision to award members a protective award for the failure of Carillion to inform and consult them, will be made.”
Carillion collapsed into liquidation in January 2018 as it crumbled under the weight of £7bn in debt, putting 3,000 jobs into uncertainty and hitting more than 450 major public-sector projects, including delaying work on two state-of-the-art hospitals in Liverpool and Birmingham.
The failure sent shockwaves through the government which started monitoring other outsourcing firms involved in similar projects amid fears of more collapses. Carillion’s failure cost the UK taxpayer £162m.
A report last month said the government liquidator is expected to make a claim for £250m against KPMG, the accounting firm that signed off on the former FTSE100 company’s accounts.
Lawyers for the official receiver, part of the government’s Insolvency Service, have sent a letter before action to KPMG, warning the accounting and consultancy firm to expect a claim related to the collapse, Sky News reported.
The letter is a precursor to a full-blown lawsuit, likely to involve the Insolvency Service, alleging that KPMG did not examine Carillion’s accounts properly, failing to spot that it was presenting a much healthier financial picture of itself than the underlying reality.
Carillion’s liquidation is still ongoing in tandem with KPMG’s rival PricewaterhouseCoopers, one of the accounting firms accused by MPs of “feasting on the carcass” of Carillion by charging £72m in fees between them for advice in the years leading up to its demise.
The official receiver’s expected legal claim against KPMG is part of efforts to secure as much money as possible for some of the companies and organisations that Carillion owed money to when it collapsed, the Guardian reported.
Earlier this year, the business secretary, Kwasi Kwarteng, launched a separate legal bid to ban eight former directors from holding senior boardroom positions. They included the former chairman Philip Green, who was once an adviser to David Cameron on corporate responsibility.
