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Peter Bone calls for change in the law to speed up redundancy payments

Peter_bone_mpWellingborough MP Peter Bone introduced an Adjournment debate on Friday. The subject was Alfred Sargent and Sons Ltd, a shoe manufacturer who have had to lay off 40 staff. Their redundancy payments have been severely delayed, and Mr Bone sought a change in the law to speed matters up.

Mr Bone told the Commons:

"It is not my intention to blame the Government for what I see as a gap in the national law. If a Conservative Government were in power today, I would still rise to press this issue. It is not party political; there is a gap in the law and it needs to be put right. The issue involves 40 hard-working men and women who lost their jobs in December last year and have been out of pocket ever since through no fault of their own; they are still out of pocket.


Early in December last year, I began to receive complaints from constituents who had been employed by Alfred Sargent and Sons Ltd in Rushden. They had been made redundant, but had not received any redundancy payments, although the company continued to trade. Losing one’s job is hard enough, but not receiving redundancy payments was very worrying for the people who had contacted me, particularly as it was just before Christmas. The situation was covered extremely well by my excellent local newspaper, the Northamptonshire Evening Telegraph, which kindly published an article reflecting my concern and suggesting that affected workers should contact me directly.

I want to make very clear that I make no criticism whatever of Alfred Sargent and Sons Ltd, its board of directors, or any of its work force. The company was faced with an extremely difficult Catch-22, and dealt with it as best it could. At the end of the story, there is some good news: Sargent’s has streamlined and continued to trade, and I understand that its prospects of success are extremely good. My aim today is not to criticise the company, but to expose a loophole in the law. Nor do I intend any criticism of the Government, who may well not have been aware of the loophole."

Mr Bone explained that former employees of Sargent and Sons could only receive redundancy payments by two methods:

"One is to approach the employment tribunal service, and then to fill in a complicated 12-page form, of which I have a copy with me. I am a fellow of the Institute of Chartered Accountants in England and Wales, and I would find it difficult to fill in this form and answer all these questions correctly, let alone someone with no financial background who has just lost their job. I have had three mass meetings with the people laid off by Sargent, and I found it incredible to learn that the jobcentre was not interested in this problem. Its basic view was, “We’re here to find you a new job and organise your jobseeker’s allowance. A different department deals with redundancy payments. It is nothing to do with us.” So, these people are left with a difficult form—which they first have to find out that they need—that they then have to submit, and somewhere down the line there is an employment tribunal at which they will be awarded a claim for redundancy payment. Only after that can the RPO enforce the claim. In practice, in this case, the redundancy money due in December to the ex-employees of Sargent and Sons will not be paid until June this year—more than half a year after they were entitled to it. That is a highly bureaucratic and unsatisfactory way of dealing with redundancy.

The second way in which the ex-employees could have got their money was if their company had approached the RPO under the financial difficulties scheme, negotiated with it, been investigated by it and, eventually, the RPO had paid the redundancy money and agreed a schedule of recovery from Sargent’s. That sounds good on paper and sounds like it would have solved the problem. However, for a family company fighting for its survival, that option is a non-starter.


The law needs to be changed so that the RPO can be proactive when a company is about to make people redundant. It should pay the redundancy money as if the company had gone into liquidation, and then seek to recover it from the company over a period of time. Under that scheme, the Government would not be any worse off, and could be better off."

(RPO stands for Redundancy Payments Office.)

Lord Mandelson's deputy Ian Pearson responded for the Government:

"I will ask my officials to revert to me and to my right hon. Friend the Minister for Employment Relations and Postal Affairs on the specific question of whether there is a loophole in the law. It is clearly the case that in rare circumstances the RPO can offer help prior to a company becoming insolvent, but the question whether that has to be triggered by a request from the company or can be offered by the RPO is an interesting one. We can perhaps explore whether there is more we can do to help. I will also ask my officials to consider the paperwork and form-filling that is involved, to ensure that it is proportionate and reasonable in the circumstances.

We live in incredible times. We face a recession that is of a different nature from any that I have lived through. We are taking some extraordinary action as a Government, and we need to continue to have an open mind and do all that we can to help those who are unfortunately being made redundant and to support viable businesses to get them through these tough economic challenges in the best possible way."


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