Unison said it could take legal action to protect staff formerly employed at Orchard Lodge, which closed last Friday evening (31 July) after 45 workers had occupied the building in protest at being given less than two hours’ notice of their redundancy.
The closure of Orchard Lodge, which provided beds for 24 young male offenders, came after the Youth Justice Board (YJB) decided to terminate its contract with the home from July.
Unison fears the home’s 70 staff, including social workers, will not receive full redundancy payments – and other entitlements including holiday pay – if Orchard Lodge’s parent company, London Secure Services, is declared insolvent.
London Secure Services is a separate limited company from other Glen Care Group businesses, but has common directors.
In its last filed accounts, for the year to 31 July 2007, London Secure Services reported a pre-tax loss of £1.24m, which included an interest charge of more than £840,000.
In October 2005, London Secure Services took out an £11.84m loan to fund its purchase of Orchard Lodge, which took place in March 2006.
If London Secure Services is declared insolvent, Orchard Lodge staff would have to claim payments from the National Insurance Fund, through the Insolvency Service’s Redundancy Payments Office.
Through this scheme, redundancy payments are based on maximum pay of £350 a week, and up to 20 years of continuous service, which would mean some staff would receive less money than they would be entitled to get directly from the company.
Claim and counter-claim
Unison regional organiser Daniel Peppiatt claimed that Orchard Lodge staff were employed under contract by Glen Care Group and should receive their entitlements in full.
But this was denied by London Secure Services director Gordon Phillips, who said Glen Care Group, of which he is also chairman, was the generic name for the overall business, but not a registered limited company in its own right.
“All the employees are paid by London Secure Services Limited,” he said.
Phillips said Orchard Lodge staff were notified of the closure at short notice because the company had run out of funds and would have been trading illegally if it had continued to operate.
Judicial review against YJB tendering process
Glen Care, with support from the Howard League for Penal Reform, has taken the YJB to judicial review, arguing that its tendering process was “flawed”.
A judgment on the judicial review is expected within 10 weeks, and Glen Care has also applied to the High Court for compensation from the YJB, which Phillips said would be put towards staff redundancy payments.
Secure children’s homes are said to offer more intensive and care-oriented support to young people than they would receive at secure training centres or young offender institutions.
However, Orchard Lodge was one of four secure homes to lose their contracts with the YJB when it decided in March to cut the number of beds it commissions from 219 to 191.
Legal challenge over last secure children’s home in London