Staff at crisis-hit Livingston technology firm Kaiam were allowed to carry on working despite bosses knowing they would not be paid.
Around 300 Kaiam employees were told on Christmas Eve they would be made redundant due to declining work levels, high costs of operation at the site and the absence of customer orders.
Workers were due to be paid on 21 December, but were informed by the company, which manufactured parts used for high speed data transfer in data centres, that payment would be delayed.
Staff were then informed on 24 December by administrators KPMG, who were appointed two days earlier, they would not receive payment from the company and would have to
make a claim through the insolvency service. Scottish Enterprise representatives yesterday confirmed to MSPs the company knew it would not be able to pay its staff yet allowed them to continue working.
Scottish Enterprise – the Scottish Government’s public body that provides grants for businesses – indicated it had encouraged the company to inform its employees and contractors about payment.
Despite cash flow concerns, no reports were made to the Government about the difficulties the company faced before 16 November.
Labour MSP Jackie Baillie asked if Scottish Enterprise had been fully informed by Kaiam in the month before workers were laid off.
Ms Baillie said: “Is it correct for me to say that prior to 16 November there were no reports to the Scottish Government about any problems at Kaiam because you were effectively blindsided by what they told you?”
Jane Pollock, global accounts team leader for Scottish Enterprise, said: “The behaviour was that they were confident that they would be able to secure what they needed in order to sell the business. That was always the message”.
The committee heard Scottish Enterprise had held “four or five” conference calls, as well as a face-to-face meeting on 19 November with either the chief executive or the chief financial officer of Kaiam.
At a meeting on 19 December, Scottish Enterprise invited the Scottish Government’s redundancy support service PACE to join a meeting with Kaiam to “remind them of their responsibilities”.
Ms Baillie asked: “Did you tell the company to tell its workforce or its contractors? Because people worked on.”
Ms Pollock answered: “They said they would just manage through, but the intention was to be able to meet their obligations.”