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City Link staff facing new year axe

Staff returning to City Link depots for the first time since news of the company's collapse broke on Christmas Day have been told that most of them will lose their jobs on New Year's Eve.

Administrator Ernst & Young (EY) called meetings today at which it said that as the company was not able to continue trading " substantial redundancies" among the 2,727-strong workforce would take effect from Wednesday.

Some workers will be kept on to help return the estimated 40,000 parcels remaining in City Link's depots to customers and intended recipients.

Protests by staff and RMT union members outside a number of City Link depots, including one at Motherwell, North Lanarkshire, were held early today.

The RMT union has accused City Link's bosses of a "horrific catalogue of mismanagement", particularly as many workers found out on Christmas Day that they were set to lose their jobs.

RMT general secretary Mick Cash has written to business secretary Vince Cable and EY demanding a summit between the administrators, the union and the Government to explore options to save the company.

Mr Cash said: " Staff were hauled into pre-dawn meetings with the administrators, with the vast majority told their jobs had been destroyed on the spot."

He went on: " The staff are angry and disgusted and up for a fight and RMT remains determined to do all in our power in the battle for justice for the City Link workforce."

However, the founder of City Link's parent company has denied the firm's collapse was mishandled.

Jon Moulton said the directors of Better Capital, which owned the parcel delivery firm, were "very sorry" about its collapse and the "horrible effects" for its workforce.

The veteran venture capitalist claimed that taxpayers would not foot "much of a bill" for redundancy payments for the firm's staff as City Link has "paid a fortune" in taxes since Better Capital took it over in April 2013.

However, the private equity firm has admitted that it still stands to recoup as much as £20 million from the company as its original investment in the business was structured as a secured loan.

Mr Moulton said it had proved impossible to save City Link and stressed that the company's directors would have been guilty of a criminal offence had they not filed for insolvency when it became clear "a couple of days before Christmas" that the firm would collapse.

Asked on BBC Radio 4's Today programme whether it had been mishandled, Mr Moulton said: "Not particularly, no.

"First of all I must say on behalf of Better Capital and its board of directors that we are very sorry about the failure of City Link and we're very sorry about the horrible effects that follow for the workforce and contractors.

"I'm afraid that is the result of the company failing, nothing more and nothing less, the company was not viable."

He added that the company would probably have ceased trading some 18 months ago had Better Capital not paid a token £1 to buy City Link from previous owner, Rentokil Initial.

The Better Capital founder also revealed that he had lost "a couple of million pounds" on City Link and warned that it would take around £100 million to save the company, making it "virtually impossible".

The TUC has called on Mr Cable to meet union representatives.

Its general secretary, Frances O'Grady, said there was nothing inevitable about the company going bust and accused its bosses of using insolvency as a means to "take the money and run".

She said: "The fast-track sackings at City Link are a prime example of the unacceptable face of casualised Britain, with workers denied even basic rights to proper consultation.

"But there is nothing inevitable about this company going bust. Too many employers are using insolvency to take the money and run, leaving the taxpayer to foot the redundancy bill.

"The Government must get a grip and reverse the changes in the law they introduced to make sacking workers in Britain so cheap and easy. Vince Cable should urgently meet with the union and administrators to explore alternatives before it's too late."

Labour demanded to know when ministers were made aware of the imminent collapse of the firm and what steps were being taken to broker a rescue package.

Mr Moulton said Mr Cable's Department for Business, Innovation and Skills was advised of the " possibility of the failure of City Link some days before it went down and we have had no request for a meeting".

Shadow business secretary Chuka Umunna has written to Mr Cable to ask "when BIS was first made aware of the situation facing City Link and what action was taken to prepare for the possibility of the firm going into administration".

He said Mr Cable should meet representatives of the firm's employees urgently, before the redundancies are made.

Mr Umunna added: "Given that taxpayers' money is set to be used to meet statutory redundancy payments in the event that the business cannot be rescued, can you explain what action ministers and officials are taking to assist in brokering a rescue package?"

He told Mr Cable:" I am sure you will share my concern at the way the firm's 2,727 staff learned at Christmas that they may face redundancy, and you will agree that all efforts should be made to see if the firm can be rescued so that as many jobs can be saved as possible."

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