An employment tribunal in Dundee has awarded the payment to 374 workers who were made redundant after Tullis Russell called in administrators from KPMG in April last year.
Lawyers said that company directors were under an obligation to give staff at least 45 days’ notice of the job losses, because more than 100 employees were affected, but each worker was entitled to sue for compensation because this did not happen.
At the tribunal, Judge Ian McFatridge ruled in favour of the paper makers’ workers, who will receive a typical payout of £3,500 each depending on their length of service.
David Martyn, an employment lawyer at Thompsons, the law firm that represented the Tullis Russell staff, said: “The more notice the workforce have to prepare for these devastating changes, the better they can organise their financial responsibilities to soften the blow.
“This award of compensation will be paid by UK administration service. That means that the taxpayer has picked up the tab because company directors have played fast and loose with the rules. This has to stop and I believe we need to see more criminal prosecutions of companies that behave this way.”
Employee-owned Tullis Russell collapsed after being hit by factors including weak global demand for printed materials, rising raw material costs and strengthening of sterling against the euro.
At the time of administration, the firm was owed some £16.9m by more than 300 individual customers.