Former Comet employees have won a multi-million pound settlement after it was ruled they had not been properly consulted about redundancies.
The employment tribunal ruling could spell a payout of more than £10m to former Comet workers, which will be met by the taxpayer. More than 6,800 staff were affected. Each member of staff will be entitled to a maximum of eight weeks pay worth £450 a week, according to The Telegraph.
More than 2,000 former Comet employees filed a claim against owner Comet Group Limited, alongside Deloitte, which acted as administrator when the electricals retailer collapsed in 2012.
Their claim was backed by evidence from senior Comet staff including, including head of finance Michael Walters.
“The liquidation of Comet may properly be described as one of the more regrettable episodes of British corporate history”
Mr Edwards, counsel for Comet claimants
The judgement, published yesterday, said: “Mr Edwards, [counsel for the largest group of claimants] setting out the general case for the claimants, put the argument bluntly: ‘As Mr Walters evidence makes clear, this was simply an old fashioned corporate raid that resulted in a number of private equity investors choosing to liquidate a 75-year-old British company, at a cost of almost 6,900 jobs in order to realise a quick and substantial profit.
“The liquidation of Comet may properly be described as one of the more regrettable episodes of British corporate history.”
However, lawyers acting for the company and administrators rebutted that contention.
The Government is conducting a review into the retailer’s failure over concerns about “malpractice”.
Accounts from Companies House suggest that OpCapita, run by controversial banker Henry Jackson, and hedge fund Elliott Advisors - which owned Comet before its collapse - collected almost £117m from its demise.
However, suppliers were left with debts of £232m.
The judgement said that Comet “failed to comply with its obligations to consult trade unions and representatives of employees affected by proposed redundancies”.
Employees who were dismissed between November 3 and November 16 were entitled to protective awards of 70 days and those dismissed on or after November 17 should be awarded 90 days.
The joint liquidators, Neville Kahn and Chris Farrington of Deloitte, said: “It is disappointing that the tribunal has found against the company.
“The Comet management team, administrators from Deloitte and our advisors worked tremendously hard under very challenging circumstances to provide the best possible consultation to the employees.
“Comet Group Limited made significant efforts to consult with its nearly 7,000 employees across more than 250 sites during the administration, whilst a purchaser for the business was sought.
“Regrettably, it proved impossible to find a purchaser willing to save the business and all the employees ultimately had to be made redundant.”