More than 100 former employees at Glasgow bakery Mortons Rolls are set to receive compensation for redundancy payments two years after the firm collapsed into administration.
The bakery, which specialises in the production of morning rolls, ceased trading in early March 2023 with 250 members of staff made redundant with immediate effect.
Shortly after, the business was rescued by a consortium of investors, known as Phoenix Volt Ltd, headed up by local businessman John McIlvogue. Serving as its managing director, McIlvogue sought to turn Mortons’ fortunes around – this included bringing back some of the workers, investing in the factory and equipment, and consolidating the range.
Now, 140 of the workers who were let go are finally set to receive compensation following a legal battle against the Secretary of State for Business and Trade.
Thompsons Solicitors, which represented the staff, said the total compensation is “well over £1m” with some long-serving workers in line for around £20k. The first half of the payment is being distributed with a further £500k expected from a protective award claim, a penalty awarded by an employment tribunal for not complying with the collective redundancy consultation requirements.
The case centred on whether a Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) had occurred before the winding up order, which would make Phoenix Volt liable.
In some insolvency situations, employees are eligible for payments from the National Insurance Fund to cover debts such as arrears of pay and a basic award of compensation for unfair dismissal. The former employees sought payments from the fund, but this was denied as the government considered that there had been a TUPE.
However, after a two-year legal battle the Employment Appeal Tribunal ruled that the transfer date occurred on 21 March 2023, not 3 March 2023 when the agreement was signed meaning they were entitled to payments from the National Insurance Fund.
Timeline of events
- 3 March 2023: A Conditional Business Transfer Agreement was entered into between Mortons and Phoenix Volt. Mortons’ director also transferred any rights he had in the brand name to Phoenix. A letter was sent by Mortons to its employees stating that they were being laid off with immediate effect, and Mortons was ceasing to trade from 5pm on that date
- 7 March 2023: a provisional liquidator was appointed
- 13 March 2023: the provisional liquidator sent a letter to all of Morton’s employees, advising that their employment may have transferred to another employer, but if there had been no such transfer, employees should regard their employment as having been terminated on 7 March 2023
- 14 March 2023: a director at PVL arranged for a cleaning of the premises and for the ovens to be turned on
- 15 March 2023: Phoenix agreed, in principle, terms of an occupancy agreement with the landlord for the premises formerly used by Mortons
- 21 March 2023: the production of baked goods was commenced
- 31 March 2023: a winding up order was granted for Mortons Rolls
- September 2023: Phoenix negotiated a new lease with the landlord.
Paul Kissen, lead solicitor at Thompsons and head of the team that represented the workers, said the people who worked for Mortons had “really been through the mill”.
“Firstly they were dismissed by the company’s previous owners in a way that saw them denied proper compensation. Then the UK Government tried to deny their responsibility to the staff which held up compensation for almost three years,” he added. “So, this victory has been hard won and we are now going to secure another £500,000 in protective award money for the workers. This is cash paid out when a company enters administration and sacks people without consultation.”
He said the compensation will be a “huge benefit to those who have suffered terrible hardship”.
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