Taxpayer foots City Link’s £1m payout over redundancies

In a stinging indictment of Better Capital, the former owner of City Link, and the former management team, the employment tribunal in Leeds has ruled that the company made a “deliberate and calculated decision” not to inform staff properly about potential redundancies, reports The Times

City Link collapsed into administration on Christmas Eve 2014, leading to the closure of 51 depots and the loss of more than 2,500 jobs nationwide. The failure was leaked to the media before staff had been informed, resulting in harsh criticism of Jon Moulton’s private equity group.

In his ruling, Judge Davis said that City Link knew what financial trouble the company was in for some time and had foreseen the potential for job losses, “yet nothing was done to consult [with] the affected employees”.

In his judgment he wrote: “A conscious decision, for the financial benefit of the first respondent [City Link] and Better Capital, was taken not to inform the employees or carry out any consultation.

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.”

He added that the insolvency “did not come out of the blue” and said: “It was being planned for as a possibility from November onwards . . . Quite simply, in full knowledge of its legal obligations, the first respondent [City Link] took a deliberate and calculated decision not to comply with them.”

Companies preparing to make 100 or more employees redundant must give the government at least 45 days’ notice so relevant departments can help staff with payments, job advice and training.

The taxpayer-funded award has been granted to 709 former employees and has been capped at £3,800 a person.

Chloe Themistocleous, of JMW Solicitors, which acted for 340 former employees, said: “The damages will hopefully help the ex-employees be able to move on after losing their jobs on Christmas Eve with no warning at all.”

Mick Cash, general secretary of RMT, the union, said: “Although this is clearly a victory for the City Link workers it remains a scandal that the tab will be picked up by the taxpayer and that those responsible for driving this company into the ground walked away without any financial penalty.”

Better Capital claimed in a parliamentary inquiry that it had done everything it could to try to save the loss-making business. It declined to comment yesterday.