The East of England Co-operative Society is to make an unprecedented financial gesture to nearly 300 former employees who were made redundant when their new employer, Vergo Retail, went into Administration.

Around 345 employees transferred from the Co-op in July 2009 under TUPE Regulations when Vergo took over the running of 12 Co-op department and home stores in Norfolk, Suffolk and Essex.

However, Vergo went into Administration on May 7th this year and is now in the hands of Administrator MCR.

Even though the staff left the Co-op’s employment a year ago, the Society’s Board of Directors has decided that an exceptional discretionary ex-gratia payment should be made to former employees who had worked for the Co-op for at least two continuous years and who were subsequently made redundant by Vergo’s Administrator.

East of England Co-op Chief Executive Richard Samson said: “As a caring organization at the heart of the communities we serve, we feel strongly that 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.

“The failure of Vergo Retail has created many victims across the country and the lack of protection for employees highlights a serious failure in the Law. 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 taken on by Vergo will be eligible for the ex-gratia payment, which equates to a 75% enhancement of their redundancy payment had they been made redundant by the Society at the date of their transfer to Vergo Retail in July 2009. The Society will be writing to those eligible shortly and cheques are expected to be sent out within the next fortnight.

The total cost to the Society will be several hundred thousand pounds.

The Society is the largest independent retailer in the region with an annual turnover of around £380 million. Its diverse business activities include: supermarkets and food stores, travel, pharmacy, optical and funeral branches, petrol forecourts, a training academy and an events and conference centre. 

Mr Samson said that the Society had been able to have a constructive dialogue with USDAW and NACO trade union representatives and additionally Ipswich Conservative MP Ben Gummer over the issue, following Vergo’s collapse.

He added: “The Directors have carefully considered this unique situation and feel that, as a responsible employer in the region, we should act on those concerns in a positive way.

“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.

“We were, therefore, extremely disappointed that a little less than a year later, Vergo’s total business failed and we have raised questions about this with the Administrator.  We now await their report with interest.
 
“Our main priority with the former Vergo stores, which we still own, is now to work with the Administrator to secure new tenants as soon as possible and we will encourage any new occupiers to consider employing former Co-op staff.”

In Essex, three of the stores are in Colchester, two in Clacton plus there are branches in Witham and Dovercourt. In Norfolk, the affected stores are in Norwich and Great Yarmouth, while in Suffolk they are in Ipswich, Felixstowe and Stowmarket.

Mr Samson added: “We would welcome a Government investigation into Vergo’s collapse and I have already written to Vince Cable, Business Secretary, offering our full support for any such investigation. We will be writing to him again to take up the issue of how employees can be better protected under the Law as this has clearly highlighted how inadequate current legislation is when a business failure takes place.”

The Society’s President Gillian Bober commented: “Our Society’s ethos revolves around ‘Building a better Society’ and in this unique situation, we have acted upon our principles by supporting a number of ex-colleagues at a very vulnerable time for them.

“We have also offered support to our former employees, providing help with CVs, giving references where appropriate and considering them for Society jobs where possible.”

Note to Editors:
The East of England Co-operative Society is the largest independent retailer in East Anglia and has over 200 trading outlets which are located in more than 70 towns and villages including the three regional centres of Norwich, Ipswich and Colchester.  

The Society’s diverse business activities include: supermarkets and food stores, travel, pharmacy, optical and funeral branches, petrol forecourts, training academy and events and conference centre. 

For further information:
Laura Bennett, Public Relations Officer, East of England Co-operative Society,
Wherstead Park, The Street, Wherstead, Ipswich, Suffolk, IP9 2BJ    
Email: l.bennett@eastofengland.coop