Three men were first former directors of any company to be charged with failing to notify business secretary of planned redundancies
City Link redundancy court case: (left to right) Robert Peto, Thomas Wright and David Smith, have been acquitted. Photograph: PA
Sarah Butler
@whatbutlersaw
Friday 13 November 2015 13.43 GMT Last modified on Friday 13 November 2015 15.46 GMT
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Three former directors of City Link have been acquitted of criminal offences over the collapse of the delivery company after a magistrate questioned the government’s use of a “retrospective crystal ball” to prosecute them.
David Smith, Robert Peto and Thomas Wright had denied failing to notify the secretary of state for business before City Link’s collapse on Christmas Eve last year that about 300 redundancies were “inevitable”.
Judge David Goodman dismissed the charge against all three men after hearing that a £17m offer to rescue the Coventry-based courier firm was rejected after its slide into administration.
The not guilty verdict will be a blow for the government, which appeared to be trying a new form of action after being forced to pay millions of pounds in compensation to staff made redundant without proper consultation over the past few years.
The three men were the first former directors of any company to be charged with failing to notify the business secretary of planned redundancies, more than 20 years after the Trade Union and Labour Relations (Consolidation) Act came into force requiring the action.
The City Link case, and one against Sports Direct boss Dave Forsey in relation to USC, emerged in reports by the Guardian.
The Department for Business, Innovation and Skills alleged Smith, Peto and Wright should have filled in a two-page Insolvency Service form warning of “inevitable” job losses.
But Goodman said the directors had genuinely believed a sale of the business was “not only possible but quite probable”.
Delivering a not guilty verdict, Goodman said that during a two-day trial earlier this month the government’s lawyers had argued that Smith would have seen City Link’s collapse was inevitable if he had looked into a crystal ball.
Goodman said: “Retrospective use of a crystal ball is a concept I struggled at the time to understand … 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.”
Mick Cash, general secretary of the RMT union, which represents hundreds of the workers who lost their jobs in the collapse of City Link, said the verdict was “a bitter pill to swallow for the thousands of City Link staff brutally dumped out of their jobs on Christmas Day last year when the company eventually admitted that it had gone bust. It shows the weakness of UK employment law and will send out a green light to bad bosses the length and breadth of the country to carry on treating their staff like dirt.”
Nicholas Greenacre, the former directors’ lawyer, said his clients were pleased with the verdict: “But their overwhelming feelings are sadness and regret that, despite their very best efforts in dreadful circumstances, they could not save City Link from insolvency and that so many people lost their jobs at the end of last year.”
A spokesperson for the Department for Business, Innovation and Skills said: “We note the decision of the court and are considering the judgment.”