The 374 people, who were made redundant with one day’s notice when the Markinch, Fife papermaker went into administration in April 2015, were awarded the compensation by an employment tribunal in Dundee, Angus.
The plaintiffs, all Unite union members, got together on a group action to take the case to tribunal, represented by Thompsons Solicitors Scotland. It has taken a year to be heard.
Because the company is in administration, the UK taxpayer will pick up the bill through the Insolvency Service.
Where more than 20 workers lose their jobs, company directors are obliged to give them at least 30 days’ notice and if the number is more than 100, 45 days’ notice is required, even if the company is in trouble.
Employees who are not given this notice period of their redundancy can sue for up to 13 weeks' pay.
However the successful claimants were only awarded eight weeks' pay as that is the maximum that can be paid through the Insolvency Service.
Thompsons Solicitors Scotland senior employment lawyer David Martyn said: “We hope it’s going to be a couple of weeks for the Insolvency Service to pay. It’s a small bit of good news for the staff.
“What will eventually happen is the Insolvency Service will seek to claim the money back. It will join the list of creditors. Ultimately the taxpayer picks up the bill."
Martyn believes that there should be a change in the law to require company directors to take out compulsory insurance against such a claim. Such insurance will pay out on other legal actions against companies in administration, such as personal injury claims.
“It’s a very good thing that people are given as much financial support as possible when they are made redundant but whether it should be for the taxpayer to pay is a matter of opinion.”
He said that more workers were eligible to claim for the compensation but not many people knew about it unless they were helped by their union.
A similar action by 400 former Paperlinx staff is listed for a preliminary hearing next month.
In March, former Aylesford Newsprint workers were awarded £750,000 under the same regulations.
