Tribunal orders collapsed contractor to compensate former employees

Welsh contractor WRW Construction, which collapsed last year, has been ordered to pay its former employees compensation by an employment tribunal.

The firm, which was based in Llanelli, failed to consult with its employees properly over their redundancies last July, the employment tribunal heard.

Claims of illegal treatment from 17 former employees of the firm were “well-founded”, the tribunal ruled last month. In its ruling, it said “no proper warning or notice [was] given” before the £64m turnover firm entered administration, and that the employees were immediately let go.

Each of the 17 employees is entitled to 90 days’ pay. In total, WRW had 100 staff when it collapsed, who were owed £257,000 in unpaid wages, holiday pay and pension contributions.

The firm also had not recognised a union at the time of its administration to negotiate with, the tribunal found.

Section 188 (1) of Trade Union and Labour Relations (Consolidation) Act 1992 states that, where a firm is proposing to dismiss as redundant 20 or more employees at once within a 90-day period or less, it must consult all persons affected by the measures.

In cases of administration, claims won for redundancy pay are paid out through the UK Government’s Redundancy Payment Service.

At the time, WRW’s collapse was the biggest industry failure in 16 months.

Though the company had a “significant order book of over £60m” administrators from Grant Thornton said, a number of events including an “unfavourable adjudication outcome” forced the firm to call in administrators.

The administrators declined to comment on the compensation awarded to WRW’s former employees.

Administrations in the construction sector have remained high throughout the coronavirus pandemic, as firms dealt with delays to projects and high inflation costs. A record 31 firms collapsed in February.

The number of administrations in September was 21, but analysts warned the tally could rise in the winter as firms face rising material prices, tough exchange rates and slower pipelines.

DRS Bond Management director Chris Davies said roofing contractors in particular could bear the brunt of increasing timber prices and a slowdown in projects.

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