Former employees of a contractor that went into administration last spring have received compensation because they were not consulted before they lost their jobs.
The 20 former employees of ARJ Construction all received 90 days’ pay after the Employment Tribunal found the contractor did not consult them or any union representatives before they lost their jobs.
Documents published by the Employment Tribunal on Friday (24 January) show the 20 workers were dismissed “without any consultation having taken place”.
Stevenage-based ARJ Construction “failed to comply” with section 188 of the Trade Union & Labour Relations (Consolidation) Act 1992, the Employment Tribunal found.
The section stipulates that, if employers plan to dismiss 20 or more employees within a 90-day period, they should consult with employee representatives at least 30 days before the dismissals take place.
The employees all lost their jobs “on or within 90 days of 29 April 2024”, the documents show. ARJ Construction initially filed a notice of intention to enter administration on 30 April.
It then appointed administrators from FRP Advisory on 9 May, according to Companies House.
Those granted compensation include the firm’s former operations director Shaun Sheldrake and its former head of digital construction James Dixon. Several trainees were also involved in the tribunal case. The documents do not reveal how much compensation was granted to the former employees.
The firm generally focused on projects in the South East worth between £10m and £60m.
Construction News reported in June that the contractor owed £940,000 to its former employers in redundancy and notice pay when it went under. At the time, the administrators had received claims for £12.5m from its subcontractors and supply chain – but documents released in November showed that had risen to £44.5m, with the potential to rise further.
In November, the administrators said a dividend for the unsecured creditors was “likely” but that the “timing and quantum of such dividend is unknown”.
That would depend on how much money the administrators could gather in retentions, on how ARJ Construction’s existing contracts could be resolved, and whether ARJ Construction would receive legal claims with regard to those live contracts.
There was considerable surprise when ARJ Construction issued its notice of intention to appoint administrators, with one construction market analyst saying the notice “came out of the blue”. In particular, they pointed to ARJ Construction’s positive net cash balance of £20m in its latest accounts.
Revenue at the contractor also soared by 61 per cent from £72.7m to £117m in the same year.
But the Hertfordshire company’s cost of sales soared from £59.3m to £101.6m, amid what directors described as “increasing inflation and labour challenges across the sector”.
CN has previously reported the issues faced by some employees when big contractors go into administration.
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Joshua Stein