More than 60 former employees of Clugston Group have now contacted specialist lawyers to bring forward a special claim to cover wages lost when they were made redundant.
The Scunthorpe construction giant collapsed early last month, with 150 staff immediately losing their jobs. A further 128 followed this week, with KPMG running the affairs.
A number of employees contacted specialist SDM Legal in the immediate aftermath of the bombshell that has rocked the construction sector and the northern Lincolnshire business community – where the three-generation Clugston operation has been a fixture for more than 80 years.
SDM had previously successfully handled claims for former employees of Monarch Airlines, BHS, City Link, Multi-York and Pulse Flexible Packaging.
Carl Moran, director at the Lancashire firm, set about seeking to recover eight weeks’ pay for each employee as compensation for the company’s failure to consult.
It is a Protective Award, covered by The Insolvency Service, with a case anticipated to be heard within six months. A judgement would be passed to Secretary of State for Business, Andrea Leadsom.
Mr Moran, who described the collapse as a “devastating event for its employees” told how “many will be worried about their rightful legal entitlements and I very much hope that the Protective Award we are claiming for them, which is compensation in addition to any redundancy payments, will make things easier for them.”
He added: “We currently have over 60 former employees but I anticipate that we will end up acting for over 100.”
The award is capped at a maximum payment of £525 a week.
As reported, Clugston failed to recover from a loss in 2017, with administrators outlining how the £176 million turnover business had sunk further into the red through a number of large and complex energy from waste contracts, “accentuated by the insolvency of a key sub contractor”.
On appointment of KPMG 150 of the 412 staff departed left, with 128 following this week. A total of 82 have been transferred to main construction contractor CNIM and other contractors who have subsequently taken on Clugston work.
It comes as it was revealed the UK construction sector “sharply” declined last month – the worst seen in a decade according to the Markit/CIPS UK construction purchasing managers’ index (PMI). It reported its eighth consecutive month of decline in the sector.
Tim Moore, economics associate director at IHS Markit, said: “December data suggested that the UK construction sector limped through the final quarter of 2019, with output falling in all three major categories of work.
“Brexit uncertainty and spending delays ahead of the General Election were once again the most commonly cited factors highlighted by firms experiencing a drop in construction activity.”
The monthly report also highlighted a “sharp drop” in commercial work, which it said was “partly attributed to clients opting to postpone spending decisions ahead of the general election”.
Housebuilding also declined for the seventh consecutive month, although the rate of decline was considered “modest”.
Construction companies said they saw a decline in new business for the month, but they also reported the softest decline in staffing numbers for four months.
Meanwhile, cost rises slowed down over the period, with the latest increase in overall purchasing costs the weakest recorded by the survey for almost 10 years.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “The civil engineering sector was the biggest victim of this new wave of decline registering its sharpest fall since March 2009.
“The relatively resilient residential sector also continued its downward spiral although at a slower rate compared to the last six months offering some small moderation in the face of reduced overall activity.”
