DELOITTE has been involved in more 20 administrations where it failed to correctly make workers redundant, potentially costing taxpayers as much as £50m in in compensatory payments, according to figures from the Insolvency Service.
The Insolvency Service has confirmed that government paid out £18.2m in protective awards in relation to Deloitte’s administration of Woolworths and that £6.9m has been paid out in relation to a 20 smaller cases.
A further £26m is expected to be paid out in relation to redundancies relating the collapse of electrical retailer Comet, where Deloitte was appointed administrator. In July, business secretary Vince Cable referred three senior Deloitte insolvency practitioners to the ICAEW over reports there was a conflict of interest when they accepted the role of administrators, given that they had previously advised the company. Deloitte has disputed that there is a conflict of interest.
“We do not believe the £26m figure quoted in respect of Comet to be correct. We estimate that the maximum possible protective award that could be applied in this case is less than half this amount,” Deloitte said in a statement.
The Big Four firm added that such awards are “common and widespread” because of inherent conflicts between employment legislation and insolvency law, which insolvency trade body R3 lobbied the government over last year.
Giles Frampton, president of R3 said: “Current legislation on collective redundancies may be clear but it is often difficult, if not impossible, to implement in some insolvencies.
“Government has shown no appetite to amend the law. We call on government to sort this out as a matter of urgency. It’s a problem within their power to solve.”
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