Redundancy payment for some Rovers workers to be just £3

MG Rovers workers have lost their seven-year battle in the High Court to recover funds to pay for their redundancy payments in the wake of the collapse of the giant carmaker.

The failure of the court case means that the 6,500 Rovers workers will be paid redundancy payments from the employee trust that was set up at the end of the company. This fund has assets of just £22,000, meaning that the previous Rover employees will be entitled to approximately £3 in redundancy payments each.

John Towers, Nick Stephenson, John Edwards and Peter Beale bought Rover for £10 in 2000, proceeding to pay themselves and Kevin Howe (the managing director) a total of £42 million. The company then went into administration in 2005 and Towers stated that a compensation fund would be set up to compensate employees who were unable to claim a full statutory redundancy payment. However, the compensation fund never received substantial funds. The 6,500 employees made redundant were therefore unable to claim a full statutory redundancy payment as they ranked as unsecured creditors against MG Rovers.

If you believe that you are about to be made redundant (or have been made redundant) then it is recommended that you obtain specialist employment law advice on your rights in a redundancy situation – including protection against unfair dismissal and entitlement to a statutory redundancy payment. It is important to act quickly as if your employer is insolvent then it may be difficult to reclaim monies at a later stage.