Large-scale redundancies: It’s a crime!

If you are a keen follower of news from the City then you will regard as “old news” the announcement of the resignation of Dave Forsey as company secretary of Mash Holdings.  For the uninitiated, Mash Holdings is Mike Ashley’s £2.7 billion holding company for his corporate ownership of Newcastle United and Sports Direct.   That’s all very interesting if you are a City watcher, but why are we reporting this in a blog concerning employment law?   The answer lies in relation to an often-ignored aspect of redundancy.

Most employers are broadly familiar with the law relating to collective consultation where large-scale (20 or more) redundancies are proposed.  But until recently, employers and employment lawyers, alike, had been happy to pay lip-service to a somewhat obscure, parallel, statutory obligation.  Specifically, where large-scale redundancies are proposed the employer must complete a prescribed form (form “HR1”) and file this with the Secretary of State – at least 30 days before the first dismissal where between 20 and 99 employees are affected, and at least 45 days before the first dismissal where 100 or more employees are involved.

What lawyers knew – but often omitted to remind their clients – is that failure to file a form HR1 is a criminal offence!  It appears that the Department for Business, Innovations and Skills (DBIS) is starting to flex its muscles over non-compliance with the statutory requirement – and the spectacular collapse of Mike Ashley’s retail fashion chain, USC, was apparently the catalyst for DBIS bringing criminal charges against Ashley’s hapless lieutenant, Dave Forsey.

News of Forsey’s prosecution should be a wake-up call for business owners, employment lawyers and insolvency practitioners.  In the future, if an employer finds himself in the position where he cannot (or hasn’t) complied with the obligation to file an HR1 then he had better give plenty of thought to the plea in mitigation which he’ll need when hauled in front of the criminal courts.    Better still, don’t get into that position: if you are an employer and fear that a burgeoning threat to your business could possibly result in substantial redundancies, then get expert legal advice at the earliest possible opportunity.

Richard Parr

Richard Parr

Richard Parr
Partner

Employment Team
RParr@LawBlacks.com
0113 227 9246

 

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