Collapse of prosecution against ex-City Link Directors for failing to notify redundancies

Criminal proceedings brought by the Department for Business Innovation and Skills (BIS) against three ex-directors of City Link, under section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992, who were alleged to have failed to give sufficient notice for redundancy plans, have collapsed.


Employers planning to dismiss 100 or more staff at one location must notify the Secretary of State 90 days in advance by filing for HR1. Failure to do so carries a potentially unlimited fine (it was up to £5,000 at the time).

City Link was placed into administration on 24 December 2014, resulting in the loss of over 2000 jobs. BIS prosecutors alleged that the firm’s former managing director, finance director and a non-executive director became aware that redundancies were inevitable on 22 December 2014, but the Secretary of State was not notified until 26 December 2014, when it was lodged by the company administrator.


During the hearing, it transpired that the company had received offers to purchase it, including one of £17 million. That meant there was a possibility the redundancies need not have occurred after all. The judge therefore ruled that there was no proposal on 22 December 2014 to make redundancies, and that the three defendants had every hope of saving City Link and its workforce by placing the company into administration. The three directors were consequently acquitted of the charge.


The judge in this case commented:

» “A director cannot be expected to put a crystal ball on his or her desk at a time of huge shock and turmoil, and predict the likely consequences of an action, unless a consequence is either the only foreseeable one or is the only consequence that can be reasonably envisaged.”

It is surprising that these comments actually depart from the statutory test for when the duty to lodge form HR1 is triggered. The obligation arises when redundancies are “proposed” – that is, when there is a plan that is likely to result in dismissal (e.g. entering administration) and it will be interesting to see if an appeal is filed.

These recent cases have been the first ever actions against directors for a failure to file form HR1. Although the directors have been acquitted in this particular instance, company officers should take care to avoid a court appearance by ensuring they file a properly completed form HR1 to BIS as soon as redundancies are proposed.

This article has been drafted on HR Legal Service’s behalf by Ward Hadaway Law Firm. Ward Hadaway Law Firm is one of HR Legal Service’s strategic legal advisory partners and provides certain services to our customers through a range of different Legal and HR support services offered by ourselves to the corporate market.

The content of this article does not constitute legal advice and it should not be relied upon. Specific legal advice may be required to address your specific circumstance.

Federacion de Servicios Privados del sindicato Comisiones Obereras v Tyco Intergrated Security and Another

A recent European Court of Justice (ECJ) ruling has found that the time spent by workers, who do not have a fixed place of work, travelling between their homes and the premises of the first and last customers is “working time” for the purposes of the Working Time Directive (WTD).

The Tyco companies, are security system installation and maintenance companies each employing around 75 technicians. These technicians are each assigned to a particular province or area of Spain. In 2011, the companies closed their provincial offices, and assigned all their employees to their central office in Madrid.

  • The employees travel from their homes to the places where they carry out installation or maintenance, and then to return home at the end of the day.
  • The distances from their home to their assignments vary, and are sometimes more than 100 km.
  • They receive details of their assignments for the following day from the companies via an application on a mobile phone, which shows them the task list for that day.
  • The companies calculate the working day as starting from the time the technician arrives at their first assignment, and ending when they leave their last assignment.
  • Before the provincial offices were closed, the companies calculated working time as starting when a technician arrived at the office to pick up the vehicle and task list, and finishing when they arrived back at that office to drop the vehicle off.

The ECJ followed the Advocate General’s opinion that the first and last journeys of the day should be classified as working time. They agreed that the three criteria of working time as set out under the Directive were satisfied:

  • Travelling is an integral part of being a peripatetic worker. When such workers use a means of transport to go to a customer designated by their employer, they must be considered to be “at work”.
  • The journeys are subject to the authority of the employer, in that it could choose to change the order of customers or cancel an appointment, or require the workers to call on additional customers on their journey home. The workers were therefore “at the disposal of the employer”.
  • Since the workers’ travel is inherent in the performance of their activities, it must be regarded as forming part of the “activity or duties” of those workers.

In reaching its decision, the court rejected the UK Government’s argument that this would lead to an inevitable increase in costs for employers and noted that the employer remained free to determine the remuneration for time spent travelling between home and customers.

Does this affect Minimum Wage Calculations?

The WTD is limited to regulating certain aspects of the organisation of working time so that, generally, it does not apply to workers’ remuneration. The payment of workers in this type of situation would not be covered by the WTD but by the relevant provisions of national law.

The National Minimum Wage Regulations 2015 (NMW) are UK domestic law and sets out rules relating to the payment of employees. The ECJ’s decision in Tyco is not directly applicable to the NMW Regulations and does not require a change of approach. That said, travel time at the start and end of each day for peripatetic workers under the NMW Regulations is currently the subject of challenge in Employment Tribunal proceedings.

What should you do now?

This case will have an impact on the calculation of working time and in particular whether an employee works for more than 48 hours a week when averaged over a 17 week period. If your employees regularly work over this you should ask them to sign working time opt out agreements. Employees are free to refuse to sign such agreements and in those cases care should be taken to ensure employees working time does not breach these regulations.

You should also review the start and finish time of employees as a result of this case. Employees must have a rest break of a minimum of 11 hours from the end of one shift and the start of the next. This case means that any peripatetic employees should be carefully reviewed to ensure that the correct rets times are adhered to.


Payroll errors costing FTSE 100 companies £30 million

Payroll errors cost the average FTSE 100 company between £10 million and £30 million per year, according to PwC

The Making payroll pay: Managing risk and compliance in an unprecedented era of change report warned that the financial and reputational risks of processing payroll late or incorrectly, not adhering to evolving data privacy and protection regulations, and the disconnect between finance, HR and payroll systems create “a countdown to a potential disaster”.

The report states that global mobility also adds complexity to the payroll process in a number of areas including secondments, dual contracts, split payroll, business travellers, currency translation and compensation.

Jonathan Dowden, payroll expert at Sage UK, warned businesses of the impact that payroll errors could have on staff morale.

“Many businesses see payroll as a back-office process that doesn’t necessarily affect business performance,” he said. “These findings challenge that way of thinking by showing that payroll can have an immediate effect on staff job satisfaction with just one misstep, and could even jeopardise recruitment.

“Payroll is something employers must get right. With a clear potential to transform staff morale, influence employee engagement, and make an employer more appealing to current or future talent, it should be brought into the spotlight for businesses.”

Chris Watt, Payright business leader at PwC, suggested that the landscape of payroll has changed. “The rapid rise of social media, smart devices, big data, and cloud computing has opened up avenues for improvement,” he said. “At the same time employees are becoming more savvy through demographic change, increased expectations and empowerment.

“As [organisations] increasingly look beyond domestic boundaries, the complexity of their payroll operations grows too. It’ s crucial businesses have a payroll that’s not just fit for today, but is capable of dealing with the increased complexity and regulations coming in the future.”

He added: “Technology and social media are making employees better informed, more connected and more vocal – get their payroll wrong and with the power of social media you and the wider world will very quickly get to know about it.”

What business can learn from sporting scandals

Recent sporting scandals are reflective of immorality in human behaviour more generally

In the 1942 film Casablanca, corrupt police captain Renault issues an order to close Rick’s café, and is challenged as to why. “I’m shocked, shocked to find that gambling is going on in here!” he says, just as a croupier emerges to hand him his illegal winnings. Immoral conduct cannot exist in a vacuum, and it is time to reflect what the current scandals in sport mean for human behaviour in business more generally.

With still only half the report by the World Anti-Doping Agency published, it is too early to say what the full repercussions of allegations of widespread doping and state-sponsored corruption in Russian track and field athletics will be, but we do know that this is not going to be a smooth ride.

Sebastian Coe, newly installed as president of the International Association of Athletics Federations (IAAF), has a huge task on his hands. As he has been an IAAF insider for many years, he must avoid the double-standards of captain Renault and achieve real reform. A blind eye won’t see what must change.

As all sides begin to engage in damage limitation or counter-accusation, is sport a special case or are there lessons about personal development for HR professionals? I’m sure there will be warnings here for everyone with responsibility in management, and they may turn out to be profound.

We already know these types of ethical problems are not peculiar to athletics. The crisis at IAAF has come hot on the heels of recent controversies at some of the world’s richest sporting governing bodies, mostly notably football’s FIFA, the International Cycling Union, and the International Olympic Committee.

We can learn from this. The lengths organisations and even countries will go to indicate a loss of ethical direction. As I see it, there are three things that can distort any businessperson’s moral compass:

1. Money for money’s sake

Competitive games have long played an important role in social cohesion, but most international sports have now lost their economic innocence. Globalised television and internet create the reach, product sponsorship creates the reward, and big business floods the broadcasters and governing bodies with money without imposing governance and transparency.

2. ‘Small p’ politics

When financial reward is not balanced by accountability the high stakes can force people to believe in preserving what they have, whatever the cost to others. The say power corrupts, so absolute power exercised behind closed doors corrupts absolutely in secret.

3. Hubris

The first two are cultural, but this one you can do something about. Hubris is what forces you to believe you’re vital – that if you weren’t there things would grind to a halt. It’s not a matter of ditching a strong ego or ambition; it’s about a fundamental loss of perspective on what matters in life. The antidote to hubris is the humility of choosing service over self-interest, but for that you need certain contextual pieces of the puzzle to be present. This is where HR directors are vital for governance.

This article is published courtesy of HR magazine and was written by Chris Dalton, associate professor of management learning at the University of Reading’s Henley Business School

Don’t be complacent about tribunal claims


The reduction in tribunal claims since the introduction of fees is good news for employers – but now’s not the time to be complacent

It is clear that the introduction of employment tribunal fees more than two years ago has reduced the number of potential claimants. However, the number of employment disputes referred to Acas for early conciliation is actually on the rise.

People now have to pay an issue fee when lodging a claim and a hearing fee once the case has been listed for a final hearing. There are two tiers of fees based on the complexity of the case. Simple claims involve an issue fee and hearing fee of £390, and £1,200 in total for more complex claims. The government is currently conducting a review of the fee regime and is considering reducing them, which may have a knock-on impact.

Since the introduction of the fees the number of single claims has fallen from an average of 13,500 per quarter to around 4,500 per quarter — a decrease of 67%. This is despite the existence of a fee remission scheme that enables claimants with reduced financial means to obtain a reduction or waiver of the costs.

Trade unions vehemently opposed the introduction of tribunal fees, describing them as a “barrier to justice”. In 2012/13 (before the introduction of fees) 36% of unfair dismissal claimants were successful at their hearings; in the first half of 2014/15 (well after the introduction of fees) it was 40%. The unions say this suggests the number of vexatious claims brought before the introduction of the fee system was overstated.

Another recent tribunal reform was the introduction of Acas early conciliation in 2014. It is now a mandatory requirement for parties to consider mediation through Acas before a claim proceeds to the employment tribunal. The number of disputes referred to Acas per quarter has significantly outstripped the number of claims brought to a tribunal even before the introduction of fees – and the new Acas procedures seem to have contributed to the reduction of tribunal claims by resolving disputes without litigation.

There also appears to be increased interest from employers in resolving disputes away from the employment tribunal. One in three organisations surveyed by the CIPD in 2015 made use of settlement agreements and, importantly, employers reported using them more since the introduction of tribunal fees. The CIPD also reported that businesses are increasingly using mediation – both formally and informally – to manage conflict.

The marked reduction in tribunal claims is not purely due to the introduction of fees. Current unemployment rates are historically low and job security has increased since the low period following the 2008 financial crisis.

However, employers should not be complacent. The economic cycle – combined with the development of new technologies, process improvements and global demographic changes – almost guarantees that some companies will need to review their headcounts and staffing structures in the future. If dismissed employees are unable to find a new job quickly they are more likely to consider bringing employment tribunal claims (potentially using insured contracts or trade union membership as back-up).

Organisations may look back on the current low volume of claims as a ‘golden period’. As such, many employers would be well advised to review their internal grievance procedures and consider including formal mediation as part of any exit process. This would establish the structures that employees and employers could use during any later downturn to resolve their differences without resorting to litigation.

This article is published courtesy of HR magazine and was written by Daniel Aherne (pictured), EY’s head of employment law in the UK & Ireland

Workplace bullying a growing concern, says Acas

Analysis from Acas reveals bullying is a serious issue in Britain’s workplaces

Workplace bullying is a serious problem in Britain, with many people too afraid to speak up about it, according to analysis by workplace conciliation service Acas.

According to Acas, its helpline received around 20,000 calls related to bullying and harassment over the past year. Most (82%) of these calls came from employees, and only about 5% came from the employer. More than half (59%) came from people who were at the stage of talking formal action.

Some callers even reported that workplace bullying had caused them to self-harm or consider suicide.

In its report Seeking better solutions: tackling bullying and ill-treatment in Britain’s workplaces, Acas estimates that workplace bullying costs the UK economy almost £18 billion per year in absence, staff turnover and lost productivity.

Its analysis also found that there are more incidences of bullying in certain groups. Those who suffer from bullying more regularly include ethnic minority employees in the public sector, women in male-dominated areas, workers with disabilities or long-term health conditions, those in the healthcare sector, and LGBT people.

While the report admits it is “unclear” whether incidents of bullying are on the increase or whether people’s expectations of acceptable behaviour in the workplace are changing, it says “the evidence points to a significant problem in Britain’s workplaces, one that needs to be better understood and addressed”.

The report calls for organisations to view bullying as an “organisational problem requiring an organisational response”, rather than being seen as “ad hoc conflicts between individuals”.

Acas chair Brendan Barber said: “Bullying is on the rise in Britain and it is more likely to be found in organisations that have poor workplace climates, where this type of behaviour can become institutionalised.

“Callers to our helpline have experienced some horrific incidents around bullying that have included humiliation, ostracism, verbal and physical abuse. But managers sometimes dismiss accusations around bullying as simply personality or management style clashes, while others may recognise the problem but lack the confidence or skills to deal with it.”

Calls to Acas around bullying have revealed that victims often fear that making complaints will make the situation worse and that some managers have dealt with bullying allegations by moving people around rather than tackling behaviours. It also found many victims have taken leave to escape the workplace.

Barber called for employers to reassess their anti-bullying policies and look at line manager selection and development.

Managers with good people management skills are essential to deal with the growing problem of bullying,” he said. “Encouraging a positive workplace climate is just as important as it allows people to have the confidence to report bullying when it occurs.”

Extension of Shared Parental Leave, part two

Older people have been given the right to take time off to help care for their grandchildren

A recent government announcement extends the shared parental leave allowance to working grandparents. Is this a step forward for flexibility and working parents? Or does the policy run the risk of reducing the amount of men taking shared parental leave? And will it be easy for HR to implement? Two HR experts have their say.

“Allowing grandparents the opportunity to share the current allowance of 52 weeks’ leave and 39 weeks’ pay is a step forward for working families, allowing parents to get back to work sooner. The impact on single parents, who did not have the option of sharing their leave with a partner, will be significant.

Evidence suggests nearly two million grandparents have given up work, decreased their hours, or taken time off to assist with childcare. These reforms have the benefit of encouraging grandparents to stay in the workforce by giving them the flexibility to balance childcare with work commitments.

However, one of the key aims of SPL was to encourage fathers to play a greater caring role, affecting a cultural shift in the way we view the responsibility for raising children. There are concerns that reforming the regime so soon will not allow time for these ideals to become entrenched. Instead the status quo, where childcare is viewed as being the remit of mothers and grandparents, will continue.

Changes to SPL will be an administrative headache for businesses. It seems likely that grandparents will be entitled to similar patterns of leave as those afforded to parents. Grandparents’ entitlement to SPL also creates a risk of increased costs, particularly for companies that offer enhanced SPL pay. In addition, a failure to extend enhanced SPL pay to grandparents if it is offered to parents could be discriminatory.

The government aims to implement the policy by 2018 and will consult on it in the first half of 2016. As such the exact details of the changes are not yet available. However, organisations should start to examine their policies now and consider the potential effects.”

This article is published courtesy of HR magazine and was written by Kate Meadowcroft (pictured), employment director at law firm DWF

Hot topic: Extension of Shared Parental Leave to grandparents

Older people have been given the right to take time off to help care for their grandchildren

A recent government announcement extends the shared parental leave allowance to working grandparents. Is this a step forward for flexibility and working parents? Or does the policy run the risk of reducing the amount of men taking shared parental leave? And will it be easy for HR to implement? Two HR experts have their say.

“At present there is little information about the extension of SPL to grandparents. However, for organisations such as the London School of Economics and Political Science (LSE), which already has a culture of supporting fathers in playing a major role in sharing childcare, this initiative may well provide additional flexibility and choice to both parents and grandparents, which we think can only be a good thing.

Including grandparents in shared parental leave will also recognise that changing family demographics can include both grandparents who are still working and families that are no longer ‘nuclear’. Therefore this encourages sensible support for a variety of family set-ups.

At the LSE we seek to ensure that fathers/partners are able to become equal carers. First, we offered enhanced additional paternity leave and now we offer enhanced pay under SPL – and we have had a reasonable number of fathers/partners who’ve taken up these provisions.

We strive to create a culture where it is acceptable for fathers/partners to be more involved with family life and balance work accordingly, and this is something we are continually working to develop. We do understand the concerns that in some organisations it is already difficult for men to feel able to take time off for parental responsibilities, so the ability for grandparents to take leave instead may not serve to improve this. However, the problem that needs tackling in these cases is the workplace culture, not legislative developments.

We would like to see that the eventual proposals do not create further bureaucracy in an already complex area, but it is hard to see how this can be avoided. On balance, we would much rather see progressive legislation introduced than not, and look forward to hearing more about how this can work in practice for both employers and employees.”

This article is published courtesy of HR magazine and was written by Natalie Pancheri, an HR policy adviser at the London School of Economics

Racial harassment prevalent in UK workplaces

The results of the largest ever survey of attitudes towards race at work contain some troubling findings

Racial harassment and bullying in the workplace is prevalent, according to the Race at Work report from Business in the Community (BITC).

The report, which is the largest ever survey of race issues at work with 24,000 responses, found three out of 10 (30%) employees in the UK had witnessed or experienced racial harassment in the workplace in the last year alone, an increase from previous years.

Only 55% of Black, Asian or Minority Ethnic (BAME) workers said they felt they are a valued member of their team, compared to 71% of white employees.

Despite this, 65% of BAME staff said they enjoy working for their organisation, compared to 61% of white employees. Additionally, 64% of BAME people said they want to progress in the workplace.

Ambition to progress in their careers is particularly high for employees from a black background (72%), and for Asian (63%) and mixed race (61%) groups. For white employees the number was 41%.

Sandra Kerr, race equality director at BITC, said it was clear that ethnic minorities’ experiences of work are still not equal to those of their white peers.

“Despite having greater enjoyment and ambition for work, the experience of workplace processes and cultures for BAME employees is certainly not ideal,” she said. “This is compounded by the extremely worrying finding that incidents of racial harassment and bullying appear to be on the rise. The scale of this challenge is immense and needs immediate action.”

The report includes four main calls to action for government:

1. Commit to ensuring that during 2016 the UK Corporate Governance Code’s definition of diversity for listed companies includes “and race” – it is currently defined as “diversity, including gender”.

2. Use its procurement spending power to make sure businesses that tender for public contracts can demonstrate a commitment to racial diversity.

3. Draw up a policy framework on race to promote good practice and close the persistent unemployment gap.

4. Consider commissioning a review into race equality in the workplace with focus on promotions at senior management levels, similar to Lord Davies’ review of women on boards.

Group distribution director of Nationwide Graeme Hughes said the report raises major issues that employers must address.

“There are some very interesting findings – from the fact that employees from ethnic minority groups tend to be more ambitious than their white colleagues, to the issue that people do not feel comfortable talking about race in the workplace,” he said. “It really lifts the lid on the current state of race at work, and we as employers need to reflect on the findings and recommendations and have a good look at our workplaces.”

Veronica Hope-Hailey: building trust is key to meaning

Leaders must swiftly respond to ethical crises and rebuild trust in business, says Veronica Hope-Hailey

Leaders need to take responsibility for scandals and “it’s not good enough” for CEOs to claim that they knew nothing of the unethical activities going on in their organisations, according to HR Most Influential Thinker Veronica Hope-Hailey, dean of the University of Bath’s School of Management.

Hope-Hailey, who is ranked fifth in the HR Most Influential Thinkers 2015 ranking, was speaking at the Corporate Research Forum’s conference in Vienna, where more than 400 senior HR practitioners gathered to discuss the meaning of work.

Referring to the recent Volkswagen diesel emissions test cheating scandal, which she called “utterly shocking” and indicative of “systemic” issues, Hope-Hailey said: “[As a leader] you cannot say: ‘I knew nothing about it’. It’s not good enough. You lead the organisation. Take responsibility.”

Hope-Hailey said that the financial crisis of 2008 has led to significant discomfort among the general public about poor behaviour in business, and that the many scandals since have added to this unease. “Leaders are under greater scrutiny and you are going to have to step up to it,” she said. “It won’t go away.”

In the case of a crisis, Hope-Hailey said there are four key trust relationships that could have been fractured. They are: trust in leaders, trust in the organisation, trust in line management and trust in external relationships. Leaders must decide which one is the most damaged, and take quick action to repair it.

“[In a crisis] you can’t do them all,” she said. “Where will you focus trust? In the case of VW will it centre trust around the leader? Around the brand? Locally in teams? Out in the customer and supplier base? Prioritisation is going to be key for them.”

“To climb out of the valley of distrust you need to create a bridge for employees and customers to get them across to the other side,” she added.

For organisations that have broken people’s trust, Hope-Hailey said how they react in the days after the crisis is critical. Immediately after the scandal she advised leaders to: apologise and take responsibility; express regret for others (not themselves); order an immediate and independent investigation; exit all those at senior levels involved with or tainted by the scandal; and work to demonstrate trustworthiness.

In the medium term, she said organisations should publish the results of the investigation and face questioning; decide whether the situation was a “blip” or whether there is a need for full cultural transformation; and if transformation is required, overhaul the section, promotion, reward and career development systems for leaders.

Hope-Hailey also spoke on the concept of ‘followership’ and said the idea of meaning in the workplace is being “renegotiated” in the wake of the financial crisis and with new generations in the job market.

“You’re not a leader because of your job title; you’re a leader when people choose to follow you,” she said. “The idea that a CEO can determine meaning and culture alone is anachronistic. Culture is co-creation – you can’t create it in a boardroom and cascade it down. It’s got to be a dialogue.”

Instead, she said, leaders should be “architects of meaning”. They should focus on creating a higher and shared sense of purpose; use the organisation’s history to demonstrate connections to the past and future; demonstrate benevolence; practise “relational” leadership rather than “putting on a red cape”; and tell their own personal leadership story, as well as listening to others.

“If we want someone to trust us and find more meaning in work we have got to spend more time demonstrating trustworthiness [as leaders],” she concluded.