Another case has come to light in which an employer's failure to notify the Department for Business, Innovation and Skills (BIS) of proposed redundancies has led to criminal proceedings. This follows the recent charges brought against David Forsey, the chief executive officer of Sports Direct (for further details please see "Collective redundancies: failing to file Form HR1 leads to criminal proceedings").
The latest case concerned charges against three former directors of the courier firm City Link for committing the same offence under the Trade Union and Labour Relations (Consolidation) Act 1992. It appears that some 300 employees were made redundant in 2014 without the directors notifying BIS by using Form HR1. Senior executives were alleged to have been aware that the redundancies were inevitable days before the HR1 was lodged by the company administrator.
It has now been reported that the directors have been acquitted of these charges, with the judge criticising the government for using a "retrospective crystal ball". During the hearing, it transpired that the company had received offers to purchase it, including one for £17 million. That meant that there was a possibility that the redundancies need not have occurred after all. The judge commented:
"A director cannot be expected to put a crystal ball on his or her desk at a time of huge shock and turmoil, and predict the likely consequences of an action, unless a consequence is either the only foreseeable one or is the only consequence that can be reasonably envisaged."
In fact, these comments depart from the statutory test for when the duty to lodge Form HR1 is triggered. The obligation arises when redundancies are 'proposed' – that is, when there is a plan that is likely to result in dismissal (eg, entering administration). BIS has said that it is considering the judgment. Given that this is one of the first cases of its kind, it will be interesting to see whether there is an appeal.
These recent cases have been the first actions against directors for failure to file Form HR1. The failure to secure a conviction in this case represents a blow to the government's novel tactic of pursuing individual directors for culpable failures to inform about redundancies. In this case, however, the judge set the bar high for successful prosecutions – arguably too high.
Although the directors have been acquitted in this particular instance, company officers should take care to avoid a court appearance by ensuring that they file a properly completed Form HR1 to BIS as soon as redundancies are proposed.
For further information on this topic please contact Sean Illing at Lewis Silkin by telephone (+44 20 7074 8000?) or email (email@example.com). The Lewis Silkin website can be accessed at www.lewissilkinemployment.com/en-gb/.