Bank freeze led us to axe staff, says practice boss
The man in charge of Jefferson Sheard Architects (UK) Limited when it plunged into administration earlier this month has said he was forced to take the action because its bank refused to lend it any more money
Tom Jones admitted he had been stung by the criticism levelled at him and his two fellow directors by former employees after they set up a new company, Jefferson Sheard Limited, just over two weeks after axing 45 jobs on July 12.
The company appointed insolvency expert P&A Partnership on August 11 after its bank, the Co-op, froze its account and cut its overdraft limit by £100,000. “The balance we owed was still above the new amount,” Jones said.
Ex-employees are incensed that missing wages and redundancy pay have still not been paid six weeks after they lost their jobs, claiming the company only put them in the picture when BD revealed details of their plight.
Jones said the firm had been caught out by last year’s Learning & Skills Council debacle – which saw a host of planned college projects dumped when it ran out of money – and the government’s decision to scrap the BSF programme. But he admitted: “I understand why people are angry. We could have given a proper explanation from the beginning. The situation overwhelmed us but there have been a lot of lessons learnt.” He said the scale of the conditions being imposed on the directors in return for the bank to extend its credit facilities – including putting their homes up as collateral – were too draconian. “We approached the bank in spring but we were asked to provide a huge security that was beyond the limit of what the directors were able to provide.
“The BSF decision took away our confidence in the future and as a consequence the directors weren’t able to agree to the onerous conditions for refinancing. The bank froze our account and we literally could not pay our staff.”
The new company employs close to 20 people from offices in Sheffield and Peterborough but around 30 have not been rehired – with many set to miss out on full redundancy payments. Administrator Christopher White said employees made redundant would only be able to “claim some of their entitlements up to certain statutory limits” via the government’s Redundancy Payments Service.
One ex-staffer, who is owed £2,000, said: “I’m only going to get a proportion of what I’m owed and they’re setting up a new company.” Another – owed £3,500 – said: “It’s not an ideal situation to be borrowing money off people because the company has let me down.”
Service helps employees made redundant
The Redundancy Payments Service, administered by the Insolvency Service, was set up in 1996 to make sure employees whose employer refused or could not pay redundancy received some compensation.
Payments for ex-employees are worked out on a case-by-case basis using a sliding scale formula which is, according to the Insolvency Service, “based on their age, length of service and contractual earnings up to a maximum limit which is currently £330 per week”.
Money paid to employees left out of pocket is paid from the National Insurance Fund and when payments have been made the RPS becomes a creditor and seeks the return of the money as part of the administration process.
Insolvency Service Guide
Download a guide on how to claim money at www.insolvency.gov.uk /pdfs/guidanceleafletspdf/guideforemployees.pdf