St Margaret's former staff sue over alleged unlawful deductions

They say management at St Margaret's in Edinburgh froze wages last year on the condition of a pay rise 2010

It also emerged the last payment of staff pensions was not paid by the school.

Administrators said teachers' pensions would ultimately be safe, but confirmed there was currently no buyer interested in the school's estate.

That could hamper claims by former staff and parents, who paid fees in advance.

A source said: "The situation is pretty bad. The teachers signed an agreement that they wouldn't claim the salary increase they were entitled to, as long as they got it the following year.

"But when it came to April this year they just didn't pay it so they are able to claim unlawful deduction of wages".

Teachers are entitled to fixed pay rises under the McCrone agreement.

Unions are also investigating where deductions from salaries made for pensions and membership to the professions regulator were relayed. The source added: "It would seem deductions from their salary to the GTCS (General Teaching Council for Scotland] weren't paid so they had to pay it themselves."

Pupils and parents were devastated after the school's closure at the end of last term. A bid to rescue it by fundraising or finding a new buyer failed.

Campaigners said they ran out of time and were forced to place their children at other schools.

Staff were made redundant on 29 June. Claims by the staff to the Redundancy Payments Office are currently being processed. Parents who paid fees in advance are also fighting to regain their money.

Blair Nimmo, of administrator KPMG, said: "Staff will get paid in lieu of notice and redundancy, by the state and any balance they are due over the statutory limits will have to be claimed on the St Margaret's liquidation.

"That will take some time to determine and will largely be to do with how we get on with selling the property and assets of St Margaret's school."

However, there is no current buyer interested in the school, which is on the market. Mr Nimmo added: "We're very keen to see it survive but the financials behind it make any bid, including consortiums, very difficult to get in this current climate.

"The nursery we thought we might have someone but unfortunately that fell through.

"Realistically we are not selling it as a school or nursery.It has no pupils or staff so we are selling buildings at this stage."

It is understood high levels of debt may be putting buyers off acquiring the school as a future business.

Teachers are likely to face wide variations in payouts through the government redundancy scheme, which is capped.

If the individual pension scheme were to go bust, the staff would not have the backing of an employer to bail it out.

Ann Ballinger of the Scottish Secondary Teachers' Association (SSTA) said: "It's a difficult situation and a lot of hard-working teachers have been treated very shabbily by the board at St Margaret's."

Mr Nimmo added: "To lose a job at any time is difficult, it's been a sad position for all concerned. It's been a tragic situation for teachers, pupils and parents. We are sensitive to that and we've tried to be extremely helpful through every step."