Workers fear minimum payouts

Rover workers can expect to receive only the legal minimum redundancy payments when notices are sent out this weekend.

Five years ago when BMW handed the company to the Phoenix Four, some staff were in line for payouts in excess of £50,000. Now they will receive only a fraction of that sum.

Last night Tony Blair gave a boost to payments when he announced a package worth £40m, including extra cash to cover notice periods usually lost when a company goes bust.

The law guarantees that workers are paid one week's gross wages up to a maximum £280 for each year worked at the company. Workers aged 41 or older qualify for 1.5 week's gross wages for each year of employment. Apprentices aged 18 to 21 receive half their weekly wage for each year employed.

Normally a 55-year-old paint shop worker with 20 years' service could expect a redundancy payment of £7,560. Workers feared they may only receive money for a maximum of 12 years, which would mean a ceiling of £3,360 on any financial settlement.

But the trade and industry secretary, Patricia Hewitt, said later that the government wanted workers to receive 90 days' pay in lieu of the 90-day consultancy period that should have taken place when largescale redundancies such as those at Longbridge were announced.

"The administrators and trade unions will need to agree that next week," Ms Hewitt said. "More than half of that extra 90 days payment will also be paid by the government in statutory redundancy pay." Exact amounts would depend on individual wages, she said, but individuals could win an additional £3,000-£4,000.

A spokesman for the Transport and General Workers Union welcomed the £40m redundancy package, but he hoped the government would consider other measures.

Workers who took out preferential loans to buy Rover cars will be badly hit if, as expected, their loans are called in by Rover's liquidators. The loans are run by MG Capital, which has also been dragged under by the insolvency, along with the leasing arms of the high street banks Lloyds TSB and Halifax.

Rover workers' pensions have a sunnier outlook. It is only 10 days since the government's new pensions safety net, the Pension Protection Fund, came into effect. It offers 100% protection for pensioners and promises to pay workers 90% of their expected pension when they retire.

Rover is likely to be its first client. The fund will absorb the deficit in the Rover pension scheme, which officially stands at £67.6m.

A new pensions regulator, appointed to oversee the conduct of occupational schemes, could delay a settlement if he believes Rover's directors have been acting against the interest of the pension fund.

He is watching the company closely to decide if sales of various Rover businesses and allegations of missing millions from the company's balance sheet show further questions must be answered. If he thinks the company has been deliberately run into the ground to avoid pension liabilities, he can pursue the directors.

Representatives from the board of the Pension Protection Fund will take over the running of the scheme from the trustees. The administrator, Tony Lomas, from PricewaterhouseCoopers, said yesterday he was in talks with representatives of the fund. He said: "They are considering the position."