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Exclusive: David Smith, Robert Peto and Thomas Wright charged with failing to notify business secretary of plans to make 3,000 staff redundant
Three former directors of City Link have been charged with criminal offences in relation to the collapse of the delivery company, which led to the loss of 3,000 jobs last Christmas.
David Smith, the former managing director, the former finance director Robert Peto, and their colleague Thomas Wright, have been charged with failing to notify the business secretary of plans to make staff redundant at the firm and will go on trial in November.
The three men were the first former directors of any company to be charged with the offence, more than 20 years after the Trade Union and Labour Relations (Consolidation) Act came into force.
Charges were brought in June, a few weeks before Dave Forsey, the Sports Direct chief executive, was sent a summons to be charged in relation to the collapse of its USC business, as first revealed by the Guardian last week.
Robert Peto.
Forsey, 49, is accused of failing to notify authorities of plans to lay off warehouse staff in Scotland, about 200 of whom were given 15 minutes notice by USC’s administrator in January that they were losing their jobs.
The legal actions against Forsey, whose case will be heard in Chesterfield on Wednesday, and the City Link men appears to mark a new approach by the Department for Business to criminal proceedings against former directors of companies that have gone bust.
The Insolvency Service declined to comment on why the department was suddenly using its powers under the act. But the action comes after the government has been forced to pay out millions in compensatory payments to staff made redundant without proper consultation.
Thomas Wright.
Under employment laws, workers should be given at least 30 days consultation before losing their jobs. The act also states that directors planning to dismiss more than 20 workers in any one establishment, such as a single shop or warehouse, are obliged to give the business secretary 30 days notice before going ahead. Failure to do so is an offence that is liable for a fine of up to £5,000.
In recent years, staff who have been let go without a company following due process have become increasingly successful in winning compensation via employment tribunals. The “protective awards” are worth up to 90 days’ pay. Under European legislation, IS often ends up having to pick up the bill for the award.
In the case of City Link, the Redundancy Payments Service, which is part of IS, paid out £5m in statutory redundancy pay to former employees of the delivery company. The handling of the collapse of City Link and USC attracted widespread condemnation and inquiries by MPs.