The GMB trade union has called on councils to intervene after more than 100 recycling workers in Scotland were given redundancy notices by social enterprise Greenlight Environmental.
It is understood Greenlight Environmental has applied for voluntary administration.
It provides recycling services to West Dunbartonshire, Inverclyde and Argyll & Bute councils and, according to the GMB, is in financial trouble after losing West Dunbartonshire contracts, although the council denies this.
GMB Scotland organiser Hazel Nolan said: “Many of their staff have been recruited through schemes to assist the long-term unemployed, and there are now serious questions to answer as to how we got to a situation whereby these vulnerable workers are being issued with redundancy notices.”
Nolan called for “urgent action from the councils who have contracts with Greenlight and who have a clear moral duty to act”, and urged the three local authorities to bring the work in-house.
A West Dunbartonshire statement said: “The claim that West Dunbartonshire Council has reduced its contracts with Greenlight is wrong. In the past three years we have consistently increased our spend with Greenlight to the current level of £1.4m a year.
“The organisation has intimated that the decision to apply for voluntary administration follows intervention by HMRC. We will assist Greenlight where we can, and will provide every support possible to the administrators and to the workers whose jobs may be affected.”
Accounts filed by Greenlight for the year to March 2017 – the latest available at Companies House – show it made a £98,335 loss after tax on a £2.57m turnover, although it said directors believed its situation was improving.
The accounts for the previous year record a loss after tax of £142,563.
Greenlight was established in 1991 with council funding. It originally collected aluminium cans and glass but later expanded into running general kerbside recyclate collections.
A holding company, Greenlight Recycling, has charitable and environmental body status and wholly owns Greenlight Environmental, which the company’s website shows having a turnover of around £2.3m.
Greenlight has been contacted for comment.