Redhall pays out £1.2m to staff in contract wrangle

SUPPORT services group Redhall said it has agreed to pay £1.2m to former staff who lost their jobs when its contract building a biofuel factory near Hull was terminated abruptly.

The Wakefield-based group was told last month its contract to make and install pipework on the Vivergo Fuels site at Saltend was being cut short because of “unacceptable” performance.

The contract termination left about 430 workers without jobs, with both Redhall and Vivergo denying responsibility for them.

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Redhall yesterday said the payout closes off the risk of future claims from staff. It added the settlement is not an admission of liability, and maintains the workers should have legally transferred to Vivergo or a new contractor.

“The agreement does not preclude the company’s former employees from pursuing unfair dismissal claims against Vivergo or a new contractor arising from the bringing to an end of the Vivergo contract,” said Redhall. “The group intends to pursue recovery of all of its outstanding costs plus damages from Vivergo.”

Shares in Redhall were unchanged at 72p yesterday.

Redhall added it has already factored in the £1.2m payment into its working capital levels.

Analysts at Redhall’s house brokers Altium Securities said the settlement covers 370 workers, and equates to about £3,250 per employee, roughly a month’s pay.

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“We see this move as an intelligent way to limit the group’s risks arising from the end of the Vivergo contract,” they said. “Redhall remains potentially exposed to any claims which Vivergo may make against the group.”

Former workers have repeatedly blockaded the Saltend site over the past month. GMB senior organiser Les Dobbs said the union will continue to pursue legal action on behalf of workers who have not accepted the settlement.

“They have offered a compromise to our members,” he said. “We’ve got members that have not accepted the compromise because they believe – and so do we – that they should have been transferred to a new company.

“Through the whole process Vivergo and Redhall (have) both acted irresponsibly by using their workers as a political football.

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“They believe they are washing their hands by putting money on the table.”

Redhall won the £18m contract last year to work on the £200m bio-ethanol site for oil giant BP and partners British Sugar and Du Pont.

It argued its work on the site, neighbouring the existing BP Chemicals Saltend plant, was 78 per cent complete when Vivergo terminated the contract.

However, Vivergo claimed the work was only 69 per cent complete and should have been totally finished by last month.

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Redhall is taking legal action to claim £14m of costs which it says remain unpaid, plus damages.

When complete the Vivergo site will be one of the largest bioethanol sites in Europe, producing around 420 million litres a year.

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