Labour Market Exploitation: Crime And Punishment

This article was previously published in the Employment Law Journal - November 2015.

The criminal law can encroach into employment territory in a number of ways. Obvious examples might include breaches of health and safety, national minimum wage (NMW) and anti-bribery legislation. But there are less obvious examples too. Hands up all those who knew that s165(2) of the Employment Rights Act 1996 criminalises an employer who fails, without reasonable excuse, to provide written particulars of a redundancy payment calculation? It is not enough for the employer merely to type the employee's termination date, age, service and weekly pay into www.gov.uk to calculate the statutory redundancy pay due. If the employer then provides only the answer and not the calculation to the employee, it could be liable on summary conviction to a fine not exceeding level 1 on the standard scale. And if the employee then requests a written statement under s165(3) and the employer fails to respond within the set notice period, it could face a fine under s165(4) not exceeding level 3 on the standard scale. For all those with your hands up, well done. Now leave them up if you know of any employer that has actually been prosecuted under these provisions. What, no hands?

Prosecutions under redundancy rules

There are probably numerous examples of unlikely offences for the uninformed that sit quietly overlooked on the statute book. Which is why it was somewhat surprising to hear recently that the Department for Business, Innovation and Skills (BIS) was bringing prosecutions under s194 of the Trade Union and Labour Relations (Consolidation) Act 1992 against City Link for alleged failures to comply with the obligation to notify the Secretary of State of proposed collective redundancies. It was even more surprising to hear that the prosecutions were being brought not only against the employer under s194(1) but also personally against the firm's former managing director, finance director and a non-executive director under s194(3). This applies where an offence by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity. In such a case, that person, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished with an unlimited fine.

The City Link case involves a rather miserable run up to Christmas 2014. The company was placed into administration on 24 December 2014 and, as a result, over 2,000 people lost their jobs. The prosecution case was that the managing director, David Smith, the finance director, Robert Peto, and the non-executive director, Thomas Wright (who represented private equity firm Better Capital on the board of City Link) knew that redundancies were inevitable on 22 December 2014. However, the company administrator did not notify the Secretary of State until 26 December. All three directors were acquitted in mid-November of the charges against them. The judge ruled that no proposal was made on 22 December to make redundancies, and that the three...