Carillion faces legal action over workers’ pay and pension rights
The company, which employs 20,000 people in the UK including thousands in Scotland, was placed into compulsory liquidation yesterday morning with debts of £1.15 billion and a pension shortfall of over half a billion after talks with the UK government to save the company were unsuccessful.
Unite Scotland pointed to current labour laws, which say employers with a workforce of more than 20 at one location are legally obliged to give employees 30 days’ notice of possible redundancies.
Carillion had been involved in the £745 million Aberdeen Western Peripheral Route (AWPR) and had contracts with Registers of Scotland, the Scottish Children’s Reporter Administration, West of Scotland Housing Association and NHS Greater Glasgow and Clyde among many others.
Network Rail awarded Carillion a contract last year to deliver platform extension works and the firm is also responsible for two facilities management contracts worth £158m with the Ministry of Defence (MoD) which cover 83 military sites in Scotland.
In the last six months, the company issued three profit warnings and yet in that time was awarded contracts worth more than £2bn by the UK government.
Unite’s Scottish secretary Pat Rafferty said: “Given (yesterday’s) drastic events it’s clear that Carillion was legally obliged to give notice to the workforce in December of the possibility of redundancies.
“It hasn’t done that. So Unite is taking advice about legal action to secure the pay and pension rights of our members.
“Obviously saving jobs is the priority but we also have to make sure that workers don’t pay the price for what is boardroom greed and recklessness.”
Unite Scotland said that the collapse of Carillion should be a stark warning about the obsessions across the UK, in Westminster, Holyrood, and local government about the privatisation of public services.
The union believes that for a long time putting public services out to private tender has “started an undercutting merry go round” which may have affected Carillion. According to Unite, the company has lost hundreds of millions because major contracts turned out to be loss-makers after tender bids were perilously low.
Pat Rafferty added: “This is what happens after years of worship at the Holy Grail of privatisation. It starts with the mistaken belief that private provision is best and ends with the tax payer picking up a billion pound tab when reality proves that is not true. There needs to be a government inquiry to establish just what went wrong at Carillion so that lessons can be learned. Meantime the administrators have to determine what contracts held by Carillion can be brought into public control.”
Unite has welcomed the fact that the government and the administrators PwC have to date given guarantees about financial support for the continuation and completion of public contracts formally held by Carillion.
The Scottish Government has confirmed it is in talks with UK counterparts and liquidators to work out how best to support Carillion employees and contracts.