An employment tribunal has ruled this week in favour of former City Link workers who have established that City Link failed in their statutory duty to consult with them about impending redundancies.
The former workers pursued claims against the parcel delivery company when they were made redundant without any consultation.
258 of those Claimants were represented by Leeds based Morrish Solicitors LLP and all were awarded 90 days’ pay.
City Link Ltd was in serious financial difficulty from an early stage and was acquired for £1 in April 2013 by Better Capital. By early November 2014 City Link had clear plans to implement a “turnaround plan” involving wide-scale redundancies and by mid November 2014 it was clear there were only 2 options – implementation of that plan or insolvency. But employees were kept in the dark throughout. By 22 December 2014 Administrators were called in and their appointment was announced in the media on Christmas Day. By New Year’s Eve 2,500 employees had been made redundant without appointing any employee representatives and without any consultation.
On 23 May 2016, the Leeds Employment Tribunal decided that “a conscious decision, for the financial benefit of City Link Ltd and Better Capital, was taken not to inform the employees or carry out any consultation.” It also said that “the consequence of that decision was that employees who could have been told on 22 December 2014 what was happening, perhaps been given information about redundancy payments, notice periods and so on, were told nothing. That led to their finding out that they had lost their jobs on the news on Christmas Day.”
City Link tried to defend their actions, suggesting that Better Capital were to blame due to “delaying the decision about whether it would invest further funds.” City Link stated that when their final investment request was rejected on 22 December 2014, they could not in practice inform and consult with employees within the specified timescales, but the Tribunal heard witness evidence and arguments from Claimants’ representatives and rejected that defence.
The Tribunal said “there was a deliberate and calculated decision not to comply with their legal obligations.” It said that “No mitigating features have been identified and in those circumstances the Tribunal considers that it is just and equitable to award the full period of 90 days in this case to all eligible claimants.”
Daniel Kindell, Associate at Morrish Solicitors stated: “We are delighted to have been able to secure the best possible result in this case. The Company defended this case throughout and its stance has been vindicated by the penalty imposed. We hope the Tribunal’s decision gives ex-employees of City Link some sense of justice. It can only be described as a travesty that successful Claimants can only claim a small proportion of this award from the government’s National Insurance Fund and City Link can continue to rely on its state of insolvency to the further detriment of those who worked so hard for it.”
 When a company intends to make more than 20 staff redundant there is a statutory period for consultation of a minimum of 30 days. That period is greater where over 100 staff are to be made redundant. Employers must appoint employee representatives (if no union is recognised) and must provide information to those representatives about the proposals to make redundancies and consult about ways of avoiding redundancies, reducing the numbers or mitigating against the effects of those redundancies – Trade Union and Labour Relations (Consolidation) Act 1992 s188. A failure to do so gives rise to a claim for a Protective Award, and a Tribunal can award compensation of up to 90 days’ gross pay, in addition to any redundancy or notice pay they may have already received, no matter what their length of service. If successful, employees can claim up to 8 weeks of that from the government’s Redundancy Payments Office.