Collapse of ISG sparks concern across construction sector
Last week, administrators confirmed that construction giant ISG had ceased trading with the immediate closure of all its sites and the loss of 2400 jobs.
ISG Ltd is a privately owned construction company. By turnover, it was the sixth biggest contractor in the UK having worked on large government projects including the building and refurbishments of prisons and schools.
Staff were notified of their job loss by email following the leaked media reports that ISG had filed for administration on Friday.
Aside from the impact this will have on many government projects, including the expansion plans underway for many prisons and schools, the announcement left many shocked and questioning how a company that is understood to have held £1.84 billion of government contracts could have been allowed to fall into financial collapse.
It has sparked a wave of concern that other chain partners may fold in the wake of ISG’s demise with industry experts reporting that, “most of the industry is sailing dangerously close to the wind.”
It seems not that long ago (although I am reliably told this was 2018) that we were asking similar questions in the wake of the collapse of Carillion. At that time, I provided advise to trade unions and their members and pursued claims for many employees who lost their jobs in almost identical circumstances. Why were lessons not learnt? The construction sector has been besieged by problems for a long time. Brexit reduced labour availability. Covid and the Ukraine war reduced material availability. This served to increase overheads and eroded profit margins.
ISG’s demise was the result of legacy issues. It could not be said to have come as a surprise. Staff should not have learned of their dismissal by email and with prior notice or consultation.
As an employment lawyer it seems inevitable that claims of unfair dismissal and protective awards, where the employer has failed to follow a fair dismissal procedure and comply with statutory obligations to collectively consult with its workforce, will follow. The ‘tab’ for which will fall on an already restrained public purse.
Large companies should be held to account. Questions should be asked of the government about how this was allowed to happen (again) and has prompted a call on the government to tighten rules on when business can continue to trade on very thin margins.
All this will be of little consolation to those employees who have woken this morning with no job to go to and bills to pay. Thankfully, the law does provide some limited protection for affected employees.
If you are affected by any of the employment law issues within this article, and find yourself dismissed with no notice or consultation, then you may have a claim you can pursue to an employment tribunal which may allow you to recover some compensation. However, these claims must be submitted in good time and so it is important that you seek timely advice.
At Lawson West Solicitors we have a team of experienced employment lawyers who can provide you with help and support.
Kate Lea, Head of Employment Team
Lawson West Solicitors, Leicester
