Laid-off staff hit out at Austin-Smith Lord

’We weren’t entirely blind to the risks’

At the start of the year Austin-Smith Lord had around 180 staff but problems in the UK and in Abu Dhabi mean it now employs just 65 people — a drop of two thirds.

The job in Abu Dhabi was suspended in August, and director Neil Chapman said the firm had been working on a plan to reduce its exposure to the contract prior to this.

“We weren’t entirely blind to the risks and we were doing everything we could to reduce them,” he said. The firm would help to re-start the job, he said, but admitted: “I don’t think we’d go back in at the same scale as before.”

He defended the decision to keep on working for Adach despite its mounting debt.

“It doesn’t take long to run up. I do think we’ll get the money back,” he said.

How the crisis unfolded

According to a series of internal emails, seen by BD, the crisis for the majority of Austin-Smith Lord’s staff began on July 26.

On that day partner Neil Musgrove emailed staff to let them know that it was “highly likely” they would not receive their full monthly salary in their upcoming pay packets.

“Our client has recently experienced some issues in drawing down funds,” he explained. “This appears to be an across the board review and is not specific to our project.”

But despite this, Musgrove admitted it “had not received significant sums of money that are properly due and payable within the terms of our contract…We will of course pay the balance of salaries as soon as funds are made available from Abu Dhabi.”

Just over a week later partner Jennifer Dixon told staff “we have reached a proposal for payment of salaries” which was detailed in a further email to staff in the middle of August. In it, another partner Ian Brebner spelt out a schedule of weekly payments which would mean employees’ salaries paid out over four weeks rather than in one go. For example, September’s payments were scheduled for 45% on September 2 followed by three further payments of 25%, 10% and a further 10%.

He told staff: “If the cash flow schedule can be followed, it would make all outstanding salary amounts which are due paid out by the end of the first week in October.”

At the end of August, Dixon reassured staff “that everything is going generally as expected with no deviations from the plan”. At the beginning of the following month she told staff it had hired Martin Bandel, an accountant and tax specialist, “to give us temporary support in this area and assist with the new accounting system”.

By the middle of September Brebner raised hopes payment from Adach was on its way saying Austin-Smith Lord had met the director general of Adach who had assured the firm it was committed “to making payment in full”.

But on October 26, Dixon issued formal notification of a redundancy consultation period. Two weeks later she told 47 staff that “because of the continued failure of Adach to meet its obligations” the firm “have no choice but to make you redundant with immediate effect”. She added: “It is with great regret and considerable dismay that we find ourselves in this position.”