UK Coal restructuring preserves 2,000 jobs
Company goes into administration and restructures to protect workers’ jobs and benefits
FOLLOWING the devastating fire that closed the Daw Mill deep mine in March 2013, UK Coal announced this week that a way forward had been found for the company’s remaining mines and 2,000 employees.
Production of coal from Daw Mill represented around a third of UK Coal’s revenue and the forced closure of the mine had threatened the ongoing viability of UK Coal Operations’ remaining two deep mines and six surface mines.
As a result of the problems caused by the Daw Mill fire, both UK Coal Mine Holdings Ltd and UK Coal Operations Ltd have this week been placed into administration.
Administrators PricewaterhouseCoopers have worked with UK Coal to separate out the viable operations of the group and agreed a compromise with major creditors that will see the pension scheme, which has a deficit in excess of £540 million, transfer to the Pension Protection Fund.
The viable mining operations have been restructured and their assets will now be held in individual companies owned by a new business, UK Coal Production Ltd, which will be run as a new Employee Benefit Trust.
Speaking earlier this week [9 July], Kevin McCullough, chief executive of UK Coal, said: Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve. Entering administration and the subsequent restructuring was the only way we could preserve any of the business.’
UK Coal have worked with the Pension Protection Fund to develop a plan which secures 2,000 jobs and provides protection on accrued benefits for employees. As well as retaining their jobs by transferring to UK Coal Production Ltd, the 2,000 employees will retain the same terms and conditions.
Around half of the current workforce are members of a defined contribution scheme and will not be affected by the administration and restructuring process, and pensions accrued prior to privatization in 1994 will also be unaffected. However, more than 2,000 deferred members and nearly 1,000 active members will see a 10% reduction in their pension entitlements under the deal.
