Redhall Engineering Solutions has agreed a £1.2m settlement with “former employees” on its contract with Vivergo Fuels.

Around 400 workers were locked out several weeks ago when the sub-contractor became bogged down in a dispute with plant owner Vivergo.

A statement from Redhall said: “This agreement compromises, with no admission of liability whatsoever, any claims which the company’s former employees felt they might have had against the company or the group arising from their employment with the company coming to an end.

“The £1.2m cost of this settlement was included in the board’s assessment of working capital adequacy included in its trading update on 7 April and closes off the potential for future claims arising from the Company’s former employees.”

The contract with Vivergo was terminated on 14 March after Redhall accepted a “repudiatory breach of contract”, it said.

Redhall maintains that the employees should transfer to Vivergo or a new contractor under TUPE regulations.

The contractor claims it is owed £14m after its contract was terminated by Vivergo which is a joint venture between BP, British Sugar and DuPont.

Redhall also said that it “intends to pursue recovery of all of its outstanding costs plus damages” from Vivergo.

Vivergo said that it cancelled the mechanical and piping works contract because the works “should have been completed by February 2011″.