back to article Remember Misco? Staff win protective award at employment tribunal

An employment tribunal has found that now defunct tech reseller Misco breached Collective Redundancy rules by failing to consult with staff when it laid them off in 2017 before entering administration. In redundancy situations where 100 or more people are affected, employers or an insolvency practitioner has a statutory duty …

  1. A Non e-mouse Silver badge

    During normal operations, I can understand the need for the 45 day consultation, but if the business is in administration, what's the point? There's no money to pay the employees for the 45 days.

    1. Korev Silver badge

      £1500ish would probably come in very useful if you've just lost your job.

      1. DavCrav Silver badge

        "£1500ish would probably come in very useful if you've just lost your job."

        Useful, yes. But if the company has no assets, and is in adminstration, where is it coming from?

        1. Flatpackhamster

          It shouldn't be beyond the wit of Parliament to create a law in which a company is required to hold the money to pay staff redundancies in escrow.

        2. Androgynous Cupboard Silver badge

          If its got no assets to pay staff then it's been trading illegally. You have to wind up before this point. I'm a bit rusty on the insolvency act but I think it was staff first, then HMRC (although it could be the other way around).

          (edit: whoops, forgot the highest priority: the insolvency practitioners themselves. no matter what, they get a slice of cake)

          1. katrinab Silver badge

            Staff first. HMRC rank at the bottom along with the trade suppliers.

      2. Anne-Lise Pasch

        That's 500 per week, not month. So more like 6000ish.

        1. Anonymous Coward Silver badge

          That's capped at £500-ish/week. Most will get less than that. How many of those workers do you think were really on £35k salaries?

          (I'm not disputing the worth, just clarifying the figures)

        2. xeroks

          Except they probably won't 90 days pay from the Insolvency Service, even capped at £500 pw.

          A previous employer of mine did the same thing and we were awarded the full whack in a tribunal. We received nothing like 90 days pay due to the various limits.

          For me it was a bonus, as I wasn't actually out of work (though I did take a temporary drop in pay). Other people were out of work for long periods of time, and they really needed the money.

          Conversely there there quite a few people who would have been eligible, but never claimed. In Miscos's case all 300 people should have been able to claim a few thousand pounds, but only 75 people did. Maybe they couldn't be bothered to fill in the forms, or just wanted to move on in life, or thought they wouldn't have a chance, or thought they were ineligible.

      3. steviebuk Silver badge

        And don't the lawyers get some?

    2. Anonymous Coward
      Anonymous Coward

      but if the business is in administration, what's the point?

      The point is to have business planning 45 days in advance. Administration does not happen in a day.

      In fact, if a company has that, it is less likely to enter administration as it will force some financial discipline. Or so the theory goes. Unfortunately, that theory does not fit the practice. In fact, it will never fit the practice until these rewards are taken from the directors and the auditors (both of them).

    3. NoneSuch
      FAIL

      At least the lawyers made out all right. Happy Christmas to them.

  2. cb7

    How much work did the administrators actually do to earn that £1.1m?

    1. MJB7

      Re: Administrators

      Work? Work!?! I think you are failing to understand the business model of the standard administrator.

      1. TonyJ Silver badge

        Re: Administrators

        "...Work? Work!?! I think you are failing to understand the business model of the standard administrator..."

        You are absolutely correct - I do fail to understand it.

        And indeed, came here to ask if anyone could explain why the administrators always seem to be the winners in this kind of scenario? Do they actually keep this money or is it used to pay creditors? From the wording in the article it seems it would be the former.

        Not being in any way facetious - this is just something far outside of my own expertise and experience.

        1. Flocke Kroes Silver badge

          Re: Administrators

          This bunch of administrators do seem to be a bit lax. Apparently they failed to spend £600,000 and some of that may reach the creditors.

        2. Vince

          Re: Administrators

          The insolvency/admin firms charge incredibly high rates and extract all the remaining money out of the business. Most if it goes to them (£1.1m in this case), and the £600,000 left went (shared out) to anyone who could make a claim - creditors generally get a few pence in the pound (if that).

          These firms have "charge out" rates of £80 for something like an administrator/office junior type per hour, and then end up in £400-£800 per hour for the "senior" people. It's a nonsense.

    2. Anonymous Coward
      Anonymous Coward

      I had a friend who used to work in the insolvency service. He spent a lot of his time trying to find where the money actually went, which was then used as evidence in prosecutions for those involved.

    3. Anonymous Coward
      Anonymous Coward

      Well the administrators will always have the first dibs on the money to pay for their services. Those services will be sought at a rate that is fair market value for dealing with the insolvency proceedings of the company and are basically put in place to run the company during this process.

      The process could be running the company as a going concern while a buyer is sought, selling off the assets and gathering evidence as to the actual state of the company and what had gone on that had led to the collapse.

      The day rate of the people involved - lawyers, management consultants, accountants, surveyors etc will not be cheap and so will rack up large bills quite quickly (for a large organisation).

      If they did not have their fees protected then no-one would do it and the result would be a free-for-all resulting in a supermarket sweep style asset grab by the creditors. It would be something akin to the news broadcasts of early Black Friday sales in the UK.

      1. Anonymous Coward
        Anonymous Coward

        If they did not have their fees protected then no-one would do it and the result would be a free-for-all resulting in a supermarket sweep style asset grab by the creditors. It would be something akin to the news broadcasts of early Black Friday sales in the UK.

        Perhaps that's a better idea, sadly Dale Winton is no longer with us to front such a thing.

      2. Doctor Syntax Silver badge

        "If they did not have their fees protected then no-one would do it"

        Sadly, you're right. However, it ought to be possible to provide a more equitable split. A cost of £1.1m to raise £600k out of the assets is probably a less cost-effective management than the one that went bust.

    4. Uberior

      Probably a lot more than the failed management previously did for the same money.

  3. Anonymous Coward
    Anonymous Coward

    Taxpayer?

    Quite worrying that the tax payer has been left to pick up the bill. Now it has been proved in court and the precedent set, then any future business can go into liquidation, not pay the staff what they are due, and leave the tax payer to pick up the cost?

    1. DavCrav Silver badge

      Re: Taxpayer?

      "Quite worrying that the tax payer has been left to pick up the bill. Now it has been proved in court and the precedent set, then any future business can go into liquidation, not pay the staff what they are due, and leave the tax payer to pick up the cost?"

      Only if the business has no assets, like in this case. Misco didn't actually own anything, so there's nothing to sell except a few office furnishings.

    2. Alan Mackenzie

      Re: Taxpayer?

      Yes. The ex-employees of that firm are taxpayers too, and one of the things they paid tax for, along with millions of others, was a sort of "insurance" against unlawful dismissal by their employer.

      That said, there was no mention of any sanctions to be taken against the ex-directors. That is worrying. Will they be free to do the whole thing all over again?

      1. MrMerrymaker

        Re: Taxpayer?

        Will they be free to do the same thing again? Course they will - I worked briefly for a corrupt company that went bankrupt, and lo, I see their new company with the same business model has been set up in the past year, Companies House don't give a damn.

        1. A Non e-mouse Silver badge

          Re: Taxpayer?

          Companies House don't give a damn

          There was an interview with one of the journalists from Private Eye recently. He said that all Companies House have the resources to do is to record information. They don't have the capacity to check anything anyone submits. And if they're told there's something wrong, there's no resource to take action to get it corrected.

          1. ibmalone Silver badge

            Re: Taxpayer?

            There was an interview with one of the journalists from Private Eye recently. He said that all Companies House have the resources to do is to record information. They don't have the capacity to check anything anyone submits. And if they're told there's something wrong, there's no resource to take action to get it corrected.

            This may well be related to a story they've been running about one MP (can't remember who), who has extremely inaccurate records filed for a company he runs, theoretically an offence. PI investigated and notified Companies House, to get the response they deal with these things on a case by case basis...

            1. This post has been deleted by a moderator

      2. S4qFBxkFFg

        Re: Taxpayer?

        It might be more effective if HMRC had an unofficial policy of looking deeply into the affairs of the major shareholders when this sort of thing happens.

    3. Anonymous Coward Silver badge
      Big Brother

      Re: Taxpayer?

      Given that the business has no assets, and the owners would presumably be more than happy to declare themselves bankrupt rather than paying staff... who do you think should pay the workforce?

      Essentially you're saying that they should get paid out of nothing. Producing money like that is purely in the realm of governments - normal businesses can't do that.

    4. katrinab Silver badge

      Re: Taxpayer?

      "Now it has been proved in court and the precedent set"

      The precedent was set ages ago. There are loads of cases like this.

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