The Department for Business has instigated charges against three former directors of the collapsed parcel delivery firm City Link for failing to notify the business secretary of its plans to make staff redundant.
According to the Guardian, David Smith the former managing director, Robert Peto, who was finance director and their colleague Thomas Wright are the first former directors of a company to be charged with the offence more than 20 years after the Trade Union and Labour Relations (Consolidation) Act came into force. They will go on trial in November.
The Guardian said the legal actions against the former City Link directors marked a new willingness by the Department for Business to use its powers to launch criminal proceedings against the directors of collapsed companies that have made staff redundant without proper consultation.
Under employment laws companies should give employees 30 days consultation before making them redundant. The Act states that directors intending to give notice to more than 20 staff in a single workplace must tell the business secretary 30 days before taking the action. Failure to do so is an offence liable for a fine of up to £5000.
The Redundancy Payment Service, which is part of the Insolvency Service, paid out £5m in statutory redundancy pay to former City Link staff.
The firm announced 2356 job losses on 31 December 2014 having gone into administration over the Christmas period.
Joint administrators Ernst & Young and Hunter Kelly retained 371 employees on a temporary basis to deal with the parcels that remained with the company as it wound down its operations.