Under the Trade Union and Labour Relations (Consolidation) Act 1992, whenever an employer proposes to make 20 or more people at one establishment redundant within 90 days or less, it must inform and consult employee representatives and notify the secretary of state for business, innovation and skills using Form HR1.
An employer that fails to file a completed Form HR1 will be considered to have committed a criminal offence. There is also personal criminal liability for any director, manager, secretary or other officer if the offence has been committed with his or her consent or connivance, or is attributable to his or her neglect. Such an offence is punishable on conviction by an unlimited fine and disqualification from acting as a director for up to 15 years. In practice, these proceedings are rarely commenced – with one recent exception.
The criminal investigation and subsequent charges against David Forsey, the chief executive officer of Sports Direct (who is since reported to have resigned), have been widely reported in the UK media. The charges against Forsey apparently follow an employment tribunal ruling against West Coast Capital (USC), a wholly owned subsidiary of Sports Direct, for failure to consult with employee representatives. USC was criticised by the tribunal for its "disgraceful and unlawful employment practices". According to press reports, USC relied on its administrator to give warehouse workers just 15 minutes' notice that they were losing their jobs. The employees were awarded a protective award of 90 days' pay by the tribunal although, as the company had entered administration, the government's Insolvency Service will need to foot the bill. Reports suggest that taxpayers have lost around £700,000 in relation to the administration of USC because of its unpaid tax bills and redundancy payments.
While a considerable degree of caution should be exercised before drawing conclusions from a single case, the Insolvency Service's decision to press charges for failure to file Form HR1 may indicate the government's increasing willingness to press charges against individuals for breach of the act's obligations, when considered necessary. Given the potentially serious consequences for both individuals and companies, these charges serve as a reminder of the importance of taking steps to make the notification within the required timeframe (ie, 30 days before the first dismissal takes effect where between 20 and 99 redundancies are proposed and 45 days for 100 or more proposed redundancies).
For further information on this topic please contact Colin Leckey or Sean Illing at Lewis Silkin by telephone (+44 20 7074 8000?) or email ([email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.
