Sports Direct bosses face criminal charges

Under Section 193 of the Trade Union and Labour Relations (Consolidation) Act 1992 employers are obliged to notify the Secretary of State for Business, Innovation and Skills on a form HR1 where they are proposing to dismiss as redundant 20 or more employees at one establishment within a 90 day period. This notification also has to be copied to the employee representatives that are going to be consulted under the collective consultation exercise. This either has to be done 30 or 45 days in advance, depending on the number of proposed dismissals. Failure to provide this notification is a criminal offence under Section 194 and potentially the employer can be liable on summary conviction to a fine not exceeding Level 5 on the standard scale. Since 12th March of this year Level 5 criminal fines have become unlimited – prior to that the maximum fine was £5,000.

For years I have been advising people of this risk, but it has always felt a little hollow in the sense that I’ve never actually heard of anyone being prosecuted. That’s all changed as David Forsey, the Chief Executive of Sports Direct, has been charged with the relevant criminal offence in relation to the collapse of fashion retailer USC. He is accused of failing to notify authorities to make warehouse staff in Scotland redundant. About 200 people were given 15 minutes notice by USC’s administrator in January that they were losing their jobs. Those employees have already received a protective award of 90 days pay after Glasgow’s Employment Tribunal heard how the staff had been informed – this is the maximum award for failure to consult for at least 45 days. The insolvency service ends up having to pick up the bill which may be why they are prepared to pursue the Directors.

Sports Direct is also facing a potential claim from around 300 zero hours staff who claim they were excluded from the company’s bonus scheme because of their type of contract.

High profile cases like this one serve as an important reminder that the collective consultation provisions and obligation to notify the authorities are there and should be complied with.