David Forsey, Chief Executive of Sports Direct, is due before Chesterfield Magistrates Court again later this month, in the on-going case regarding his alleged failure to notify the Department for Business, Innovation and Skills (BIS) of collective redundancies at USC (a subsidiary of Sports Direct).
In 2015, 83 employees of USC were made redundant after the company went into administration. Mr Forsey is being prosecuted under the Trade Union and Labour Relations (Consolidation) Act 1992, which requires an employer to notify BIS where they are proposing to dismiss as redundant 20 or more employees within a 90-day period. 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 received by the Secretary of State at least 30 days before the first dismissal takes effect and this increases to 45 days where the employer proposes to make 100 or more dismissals.
A failure to comply with the notification provisions is a criminal offence, attracting a potentially unlimited fine on conviction.
The case against Mr Forsey, in which he denies the charges, follows similar proceedings last year against three Directors of City Link. In that case, the Directors were ultimately acquitted of all charges with the Court accepting that just before the redundancies were made, all three Directors genuinely believed that the sale of the company was probable. Nevertheless, these cases do appear to show a new willingness to prosecute Directors for a failure to notify and should come as a stark reminder to business owners of the importance of following the correct procedures when large scale redundancies are proposed.
For further advice or information please contact the Employment team on 088 088 6004.