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Company directors could face prosecution if they break redundancy rules

WORKPLACE RIGHTS: Employers that flout redundancy procedures by failing to notify the Department for Business, Innovation and Skills risk criminal charges.

by Michael Burd and James Davies
Last Updated: 01 Dec 2015

Employers implementing 20 or more redundancies are legally required both to inform and consult employee representatives and notify the Department for Business, Innovation and Skills (BIS) using form HR1.

Failure to notify BIS is a criminal offence, punishable by an unlimited fine and disqualification from acting as a director for up to 15 years. While prosecutions are extremely rare, an exception was recently made in the case of David Forsey, the chief executive of Sports Direct.

This followed a tribunal ruling of 'disgraceful and unlawful employment practices' by one of Sports Direct's subsidiaries when making workers redundant without consultation.

The employees were awarded the maximum 90 days' pay (the bill for which is paid by the taxpayer, because the company had entered administration).

The decision to start criminal proceedings against the individual personally for failure to file form HR1 may indicate an increased willingness to press charges against company officers where redundancy duties are flouted.

Given the potentially serious consequences, it is a salutary reminder of the importance of making the notification within the required timeframe.

Michael Burd and James Davies work at Lewis Silkin LLP solicitors. Email them at: employment@lewissilkin.com

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