Employers are under a statutory obligation to provide the Secretary of State with advance notice of collective redundancies. Failing to do so can result in criminal prosecution. However, it is rare in practice for such prosecutions to be pursued.
Perhaps the recent press reports that Dave Forsey, Chief Executive of Sports Direct, is due to face charges in Chesterfield Magistrates Court this week, signals change.
The statutory obligations are triggered where 20 or more redundancies are proposed at any establishment within a 90 day period. It involves submission of a standard form, known as the HR1 form. As with collective consultation the timing depends on the actual number of redundancies so where there are 20-99 redundancies proposed the form needs to be sent at least 30 days before the first dismissal. If there are 100 or more it should be sent at least 45 days before the first dismissal.
The redundancies leading to Mr Forsey’s prosecution involved around 200 workers at fashion chain West Coast Capital (USC) being given just 15 minutes’ notice by administrators that they would be losing their jobs before the company was shut down.
Where redundancy exercises have been planned well in advance, due to operating changes, submission of the HR1 form will be standard practice. Where redundancies have been caused by insolvency pressures it is much more likely that the notification time limits will be missed. It is after all unlikely to be in the interests of creditors that the company should continue to trade for the full advance notification period as that will drain further funds away from them. However, there are no insolvency exceptions that excuse the employer from sending the HR1 form.
Following this development, directors and insolvency practitioners should be aware of the risks and the potential for individual criminal liability which carries with it the threat of an unlimited fine.