Under the Trade Union and Labour Relations (Consolidation) Act 1992, whenever an employer proposes to make 20 or more people at one institution redundant within 90 days or less, it must inform and consult employee representatives and notify the secretary of state for business, innovation and skills (BIS) using Form HR1.
An employer that fails to file a completed Form HR1 and notify BIS commits a criminal offence. There is also personal criminal liability for any director or other company officer if the offence has been committed with his or her consent or support, 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.
The amount of notice required depends on the number of proposed dismissals; where the employer proposes to dismiss 20 to 99 employees, notification must be served on BIS at least 30 days before the first dismissal takes effect (increasing to 45 days where the collective redundancy involves 100 or more employees).
There have been several recent cases where individual directors have been charged with failing to comply with these requirements. Most recently, a case was brought against three former directors of City Link. City Link went into administration, which resulted in the loss of approximately 2000 jobs. BIS prosecutors alleged that the company officers became aware that redundancies were inevitable, before Form HR1 was lodged by the company administrator.
However, in this case, the prosecution against the directors failed. The judge ruled that no proposal for redundancies was inevitable/apparent and the directors were acquitted of the charge. The judge commented that:
“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”.
These cases demonstrate that the government is increasingly willing to pursue individual company officers if they fail to notify BIS within the correct notification periods following a collective redundancy. Employers need to ensure that notifying the Secretary of State in such circumstances is something that it built into their redundancy processes, to make sure it is not inadvertently overlooked.
Whilst the directors were acquitted in the City Link case, senior company officers should ensure that they file Form HR1 with BIS as soon as redundancies become apparent, to avoid the risk of possible prosecution by the government.
If you have any questions arising from this article or would like further information on collective redundancies, please get in touch with a member of our Employment team.