Earnings from direct provision parent business propped up failing scaffolding firm, WRC told

Millions of euro in cash injections which had propped up a failing scaffolding firm had to end last year after a drop-off in State contracts for direct provision hit business at its parent firm, an executive has said.

An ex-employee, Therese Sherlock, has alleged the termination of her employment at JRS Scaffolding Ltd on the stated basis of redundancy a year ago was an unfair dismissal.

Sherlock argued at the Workplace Relations Commission (WRC) on Tuesday that assets, contracts and some staff were transferred to a related company, so the company could not say there was a redundancy situation at the firm.

This was denied on behalf of the firm, which was once run by Sherlock’s husband, its former managing director Alan Sherlock, the tribunal heard.

Sherlock’s stance was that the company did not cease trading after her termination, but had instead “amalgamated” with another scaffolding firm, Summit Scaffolding Ltd.

“There was live contracts. They were still carrying out the contracts that they had,” she said.

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“They said no staff went over, but they did,” she added. Sherlock gave four names of JRS staff and said five or six in all had gone to Summit.

The firm’s barrister, David Purdue, instructed by Clark Hill Solicitors, said Sherlock’s job came to an end “because of business failure”.

“The business became financially unviable and completely closed down. Scaffolding has to remain in place – if a company ceases trading, the scaffolding can’t be removed from [a building] site,” counsel said.

“The entire workforce ceased, contrary to what Sherlock says, in November. There were junior members, scaffolders, junior operatives – if they chose to work with Summit, that’s their business,” he said. Those staff eligible for redundancy were paid, he said.

Saif Mehr, the group chief financial officer of Codelix Ltd, the owner of JRS Scaffolding, said in evidence that JRS “wasn’t in any way sustainable” as a business and had “a lot of capital requirement”.

“There could have been €3-€4 million put in,” Mehr said. “Some of that was paid back, but at the end the liabilities outgrew the performance of the business,” he said.

Codelix’s business was in the area of direct provision and accommodation centres, Mr Mehr said. “Their business model was down with the reduction in the direct provision contracting from the government,” he said.

It was in that context that the parent firm decided it could “no longer afford to put in the money” required to keep JRS afloat, Mehr said.

JRS’s balance sheet was “over a million” in the negative, with turnover “going down, bad debts and credit notes to clients”.

He said that Codelix was being “threatened with lawsuits if JRS wound down the business” and it “had to go to a competitor” to finish out JRS’s scaffolding contracts.

Mehr denied these had been sold to Summit – rather, he said, it cost Codelix “a substantial amount of money”. He later put this figure at half a million euro.

“Did Codelix or JRS place staff with anyone else?” Mr Purdue asked.

“No, there was no offer from JRS to any staff member,” the witness said.

Sherlock said a director of JRS’s parent company, Codelix Ltd, was also the director of Summit Scaffolding, as well as another firm called Scaffmax.

Mehr’s evidence was that JRS had been the only scaffolding company owned by Codelix, and that it had nowhere to place its ex-staff when it closed.

Sherlock’s submission was that stock, lorries and staff were sent from JRS to a Summit Scaffolding yard in Rathcoole, Co Dublin.

Adjudication officer Pat Brady closed the hearing and said he would issue his decision on the case in the coming weeks.