Criminal Prosecutions for Failing to Notify BIS of Collective Redundancies
David Forsey, chief executive of Sports Direct, and three directors of City Link are being prosecuted for failing to notify BIS of collective redundancies.
Earlier this year 83 warehouse staff were made redundant at USC, the fashion retailer owned by Sports Direct since 2011. There were also around 3000 redundancies at City Link after the collapse of the delivery company in December 2014.
These are thought to be the first criminal prosecutions for failing to comply with obligations to notify the Secretary of State of collective redundancies in advance, contained in S193 Trade Union and Labour Relations (Consolidation) Act 1992.
Employers notify collective redundancies on an HR1 form available from the Insolvency Service. Where 100 or more redundancies are proposed at one establishment within a period of 90 days or less, the employer must notify the Secretary of State at least 45 days before the first dismissal takes effect. Where 20 or more are proposed, this reduces to 30 days.
The case against David Forsey was heard by Chesterfield Magistrates Court on 14 October 2015 and is ongoing. The trial of the three City Link directors is expected to take place in November.
Failure to notify the Secretary of State is a criminal offence and can result in a fine not exceeding level 5 on the standard scale. Since 12 March 2015, level 5 criminal fines are unlimited, but prior to that the maximum fine was £5,000.
The fact that the Secretary of State is now using the power to prosecute employers who fail to notify him of collective redundancies will be of concern to employers. Employers need to ensure that notifying the Secretary of State is built into their redundancy processes so that this obligation is not overlooked.
The articles published on this website, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your own circumstances should always be sought separately before taking any action.