23 November 2015 #Employment
City Link was placed into administration on 24 December 2014, resulting in the loss of over 2000 jobs. Employers planning to dismiss between 20 and 99 staff or more staff at one location must notify BIS in writing 30 days in advance. Employers planning to dismiss 100 or more staff at one location must give BIS 45 days’ written notice. Failure to notify BIS in this way is a criminal offence, for which the maximum fine is currently £5,000.
BIS prosecutors brought criminal proceedings alleging that 3 of the directors became aware that redundancies were inevitable on 22 December 2014, but the Secretary of State was not notified until 26 December 2014, when notice was lodged by the company administrator.
In court this month, the 3 ex-directors, denied that they should have notified BIS earlier than 26 December 2014. The Judge dismissed the charge after the ex-directors each gave evidence that they genuinely believed a sale in administration was not only possible, but quite probable.
On 13 November 2015, the judge ruled that no proposal was made on 22 December 2014 to make redundancies, and that the three defendants had every hope of saving City Link and its workforce by placing the company into administration.
The case acts as a reminder to the government that employers are not expected to be able to predict the future, and that the stressful circumstances that directors find themselves in when trying to rescue a company facing insolvency should be taken into account. As the judge stated: "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”. That said, the prosecution itself demonstrates that directors (and those advising them) need to be acutely aware of their obligations to notify the Secretary of State of collective redundancies as soon as those dismissals are proposed.