East of England Co-operative Society has stepped in to help hundreds of staff hit by the collapse of Vergo Retail.
Vergo snapped up 12 department stores from the society in April 2009 but fell into administration three months ago. Around 345 staff transferred to Vergo as part of the deal.
East of England Co-op has now pledged to make “an exceptional discretionary ex-gratia payment” to some 290 staff that were made redundant by Vergo but had worked at the society for at least two continuous years.
“We would like to show our support to those ex-employees who had previously been Co-op employees for at least two years, as the law has clearly failed to protect their rights, in spite of the prevailing legislation,” said Richard Samson, chief executive of East of England Co-op.
“Although there is no legal obligation for the society to contribute to their redundancy pay, we are concerned that the law has been ineffective in protecting their employment rights in this situation.”
Around 290 of the 345 staff are eligible for the payout - a 75% enhancement of their redundancy payment had they been made redundant by the society at the date of their transfer to Vergo.
Samson added: “We transferred the business to Vergo in good faith last year, providing the opportunity for continuing employment for our staff, given that we would have been forced to close those stores otherwise.
“We gave Vergo a significant amount of support, including rent-free premises for a year.”
Co-op store deals fail to save Vergo (12 May 2010)
East of England axes department stores (11 April 2009)