Sports Direct have been in the news a lot over the past year or so regarding their employment practices. Recent reports surrounding the redundancy of around 200 staff at its fashion arm, USC, suggest that this is unlikely to change any time soon.
There are a number of steps which must be taken when considering making 20 or more redundancies at one site. These include consulting collectively with a recognised Trade Union or elected representatives for a period of at least 30 days (or 45 days if there are going to be 100 or more). A possible consequence of not complying with this would be compensation being awarded in Employment Tribunal proceedings.
In addition, it is necessary to inform the Secretary of State for Business, Innovation and Skills (BIS) of the fact that more than 20 redundancies are being proposed in a 90 day period. This is done by filing an HR1 form with BIS. It is important to ensure that, separate from the obligation to consult for at least 30/45 days, any dismissal does not take effect before the expiration of 30 days (if there are between 20 and 99 redundancies) or 45 days (if there are more than 100 redundancies) from the filing of the HR1. Failure to do this can result in criminal prosecution, with an unlimited fine being imposed.
USC allegedly gave its staff only 15 minutes notice of their dismissal on the grounds of redundancy. Employment Tribunal proceedings were issued by employees who were affected, and they were successful in their claims for unfair dismissal and a failure to consult. In addition to this, USC failed to notify BIS, within the required timeframes, of the imminent dismissals. This has led to the Chief Executive of Sport Direct being charged in connection with this failure. He is due to appear before Magistrates shortly. If he is found guilty, not only could he be hit with an unlimited fine, but he could also be disqualified from holding any Directorship for up to 15 years. Indeed, it is understood that he has recently resigned from his position with Sports Direct.
Historically, criminal prosecutions in these situations have been rare. However, there does appear to be a change in approach with more of these now being reported. Notifying BIS of any impending collective redundancy situation is relatively straightforward. However, not doing so can have very serious consequences.