Staff at a manufacturing plant in Livingston were allowed to carry on working despite bosses knowing they would not be paid.
Around 300 Kaiam employees were told on Christmas Eve they would be made redundant due to declining work levels, high costs of operation at the site and the absence of customer orders.
Workers were due to be paid on December 21 but were informed by the company, which manufactured parts used for high speed data transfer in data centres, that payment would be delayed.
Staff were then informed on December 24 by administrators KPMG – appointed two days earlier – they would not receive payment from the company and would have to make a claim through the insolvency service.
In a committee meeting at the Scottish Parliament on Tuesday, Scottish Enterprise representatives confirmed to MSPs the company knew it would not be able to pay its staff yet allowed them to continue working.
Scottish Enterprise, the Scottish Government’s public body which provides grants for businesses, indicated it had encouraged the company to inform its employees and contractors about payment.
Despite cash flow concerns, no reports were made to the Scottish Government about the difficulties the company faced before November 16 – just over a month before entering administration.
Labour MSP Jackie Baillie asked if Scottish Enterprise had been fully informed by Kaiam in the month before workers were laid off.
Ms Baillie said: “Is it correct for me to say that prior to November 16, there were no reports to the Scottish Government about any problems at Kaiam because you were effectively blindsided by what they told you?”
Jane Pollock, global accounts team leader for Scottish Enterprise, said: “The behaviour was that they were confident that they would be able to secure what they needed in order to sell the business. That was always the message”.
The committee heard Scottish Enterprise had held “four or five” conference calls, as well as a face-to-face meeting on November 19 with either the chief executive or the chief financial officer of Kaiam.
At a meeting on December 19, Scottish Enterprise invited PACE (the Scottish Government’s redundancy support service) to join a meeting with Kaiam to “remind them of their responsibilities”.
Ms Baillie said: “You were told on December 21 there may be a delay of a week in paying salaries.
“Then you were told the following day, the salaries wouldn’t be paid at all.
“Did you tell the company to tell its workforce or its contractors? Because people worked on.”
Ms Pollock answered: “We asked the question in terms of what the plans would be.
“They said they would just manage through, but the intention was to be able to meet their obligations.”
Ms Baillie responded: “I suppose knowing that they weren’t going to pay people I would have expected you not to ask but demand that they share that information with workers who were going in or contractors who were engaging in contracts in good faith, knowing that they wouldn’t be paid.”
Around £22,648 was raised through a Crowfunding campaign last month in a bid to support the Kaiam workers who were made redundant.