DECEMBER 2014 COLLAPSE OF CITY LINK –
PROSECUTION OF THREE DIRECTORS FOR FAILING TO CONSULT
In November, three directors of logistics firm City Link (including the CEO and finance director) are before the courts over their failure to consult with workers. If convicted, they face fines and the prospect of being struck off from working as directors elsewhere.
The prosecution is taking place partly as a result of tireless campaigning and forensic investigation by RMT and our Parliamentary Group – keeping the issue in the media and unearthing information about what directors knew and decided when.
That the company could not be rescued, was not helped by the directors failing to be more open about their plans earlier. We now know, that although staff were not notified until Christmas 2014 of the impending closure of City Link, as early as 9 October, directors were considering radical restructure – including closing down the company.
Under TULR(C)A 1992 an employer must consult about its “proposals” – this being something less than a decision – and must consult while its plans are still at a formative stage. Despite representatives of the company receiving legal advice on the need to consult, the company chose not to. It is for the courts to assess the directors’ role in that failure.
Although the conduct of some of the directors finally being scrutinised by the courts is welcome, the potential fines that they face (capped at £5,000 each) are paltry. This is specially so as the CEO was paid over £600,000 – in the year to 29 December 2013 alone.
It’s inexcusable that individual workers labelled as self-employed (maybe bogusly) will likely recover less than 2% of sums due. And it’s inexcusable that the state has had to pay out around £4 million (via the National Insurance Fund) to workers the company short-changed.
We will continue to campaign for justice for our members and for the law to be tightened.