Three former directors of City Link were acquitted earlier this month of failing to notify the Department for Business, Innovation & Skills (BIS) of anticipated redundancies prior to the collapse of City Link last Christmas. The judge held that the directors believed a sale of the ongoing business was “not only possible but quite probable” and this would have avoided the need for dismissals. The judge ruled that the directors would only be culpable if the consequence of their actions (ie redundancies) was either “the only foreseeable one” or “the only consequence that can be reasonably envisaged".
This is potentially encouraging news for directors faced with having to call in administrators even though such prosecutions have been rare in the past. Employers are required to notify BIS (using form HR 1) of a proposal to dismiss 20 or more employees as redundant at one establishment within a period of 45 days or less. Failing to notify BIS “without good cause” may result in the company and/or its officers being prosecuted. Previously the maximum fine was £5000 but it is now unlimited, which might lead to a rise in prosecutions.
If involved in collective consultation, factor into your plans the last date by which you might have to notify BIS. This is 30 days before the first dismissal takes effect when proposing to dismiss 20 – 99 employees and 45 days when proposing to dismiss 100 or more employees. Bear in mind that “redundant” has a broad meaning in this context. It may include employees who have been consulted about changing terms and conditions through an offer of re-engagement on a new contract. Form HR 1 can be found online and comes with helpful instructions.