Still social? Soap enterprise told to come clean on status as 30 staff remain unpaid

Clarity & Co.’s new owner is under pressure to commit to social enterprise status, with a six-week deadline given by Social Enterprise UK – but first it must resolve crucial cash flow issues, with over a third of staff not currently being paid.

A leading social enterprise is at risk of being thrown out by the UK’s national membership body, as it settles into new ownership and grapples with cash flow problems.

Last month Clarity & Co. was rescued from collapse in a deal that managed to save all 85 jobs.

The 165-year old charity – which produces toiletries and homecare products from its manufacturing site and laboratory in Highams Park, east London, under three brands, CLARITY, The Soap Co (created 2015) and Beco (created 2018) – was bought by a company specially formed to acquire it, Clarity Products Limited, part of a South Africa-based specialist engineering group, MEWA.

However, while a statement at the time promised that the new company would “continue to operate as a social enterprise”, Pioneers Post has learned that Social Enterprise UK is still waiting for proof that this will happen.

Meanwhile, it also emerged this week that more than 30 staff, including senior management, had not yet been paid their last month’s salary.

“I’ve rung in sick because my mental health isn’t good at the best of times. I was so stressed and so upset” - an unpaid Clarity employee

While Clarity - Employment for Blind People (trading name Clarity & Co.) was set up as a charity, with a mission to help visually impaired and other disabled people into the workforce, its replacement is currently registered on Companies House as a private limited company. Nigel Lewis, who has continued in his role as managing director following the buyout, told Pioneers Post this was a matter of pragmatism – it was important to set up the new company quickly to facilitate the rescue deal. 

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Charlie Wigglesworth, deputy CEO at Social Enterprise UK, said Clarity Products Ltd. had been given six weeks to demonstrate that it fulfils its criteria as a social enterprise (including on ownership, social mission, and reinvestment of profits). 

If it cannot, it would no longer qualify for membership – a situation that could seriously affect its relationship with customers and potentially its financial sustainability.

Wigglesworth said it was an “unusual” situation for the membership body to be faced with: “Going from a charity to a private business is a pretty big jump.” 

He said the specific structure chosen was up to Clarity, as long as it met the criteria.

Social Enterprise UK is ready to support Clarity, but also wants to hold it accountable, said Wigglesworth. Without setting a clear deadline, there would be a risk of things “dragging on”. 

Social Enterprise UK has been assured that the deadline will be met, he said.

Lewis told Pioneers Post the new owner and sole director, Nicholas Marks, was “committed to maintaining the mission and the ethos of what [Clarity] does in terms of employing disabled people, and his long-term goal is to try and see that grow and therefore, a) protect the jobs that people have, and b) hopefully grow more jobs for disabled people”.

The company was “committed” to meeting the requirements of becoming a social enterprise “over the next two to three weeks”, Lewis added, which would include altering the organisation’s governing documents.

It is unclear if Marks has any previous interest or involvement with social enterprises, but Lewis said he had “really embraced the concept” and that the two have also discussed Marks’ other businesses employing people with disabilities.

An employee, who asked not to be named, told Pioneers Post that the majority of staff were seeking to join their trade union – Community – “to stand together and to give the new owner a clear message of unity”.

“All the staff want it to continue as a not-for-profit social enterprise,” said the employee, who also called on customers and suppliers to stand by the staff and the vision of the organisation and to put pressure on the new owner to ensure this is maintained. 

Vulnerable staff

While the new company’s social enterprise values came under the spotlight, the trust of its workforce has also been tested over the past fortnight, as 30 employees waited to receive their February pay cheque.

Some 80% of the organisation’s staff have a disability or long-term health condition. 

A second employee told Pioneers Post they were “absolutely broke” and had now missed two rent payments. “Most of February was looking forward to payday, and then payday didn’t come. Now it’s totally left me in the lurch… There is still no definite end in sight.”

This employee suggested that the implications of waiting to be paid may be longer-lasting.

“I’ve rung in sick because my mental health isn’t good at the best of times. I was so stressed and so upset.

“It will be hard to come back from this… the trust has gone from the company now. It’s not just the money. It’s sort of ruined the job... The caring ethos seems to have gone forever. I know they’re trying to make it into a competitive business, but it’s at the expense of the staff.”

“Getting people paid is the number one priority” - Nigel Lewis, managing director

It is understood that unpaid staff also include the management team, including the managing director.

Lewis said there were “short-term cash flow problems” linked to establishing the new company, but declined to reveal the size of the current funding gap.

He said that getting people paid was the “number one priority”, and staff were being “kept up to date”. The new owner is “completely aware of the issue and is doing his best to get the cash”, he added.

Pioneers Post has requested a comment from owner Nicholas Marks, but at the time of publication had not received a reply.

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