City Link's former directors to stand trial for redundancies failures

City Link staff found out last Christmas Eve that the firm had called in the administrators, but as then-managing director David Smith, former finance director Robert Peto and fellow executive Thomas Wright have been charged by police with failing to notify the business secretary of plans to make staff redundant, according to a Guardian report on Wednesday afternoon.

The trio were charged a few weeks ago, making them the first former directors of any company to be charged with the offence, the paper said, with Sports Direct chief executive Dave Forsey having been summonsed for a similar offence last week.

AIM-listed private equity investor Better Capital bought the delivery company from Rentokil for £1 in April 2013, with administrators appointed 17 months later when, according to the company, "the appointment of an administrator was leaked to the media ahead of the intended announcement".

The government has recently been forced to pay out significant amounts of compensation payments to staff made redundant without proper consultation, with the Insolvency Service's Redundancy Payments Service paid out £5m in statutory redundancy pay to former employees.

Under UK employment law, staff should be given at least 30 days consultation before they are to lose their jobs, with directors who are planning to lay off a group of more than 20 workers required to give the business secretary 30 days' notice before proceeding.

Jon Moulton, chairman of Better Capital, told a parliamentary joint select committee hearing in January, that he had warned staff at the Department of Business, Innovation and Skills (BIS) a week before Christmas that City Link was likely to collapse.

Speaking before a joint Scottish Affairs and BIS select committee, Moulton said he told BIS staff on 18 December there was a distinct possibility City Link would enter administration.

Moulton, who said he personally lost £2m and his firm £20m on City Link, blamed the early liquidation on workers' unions, accusing them of "harassing" news organisations to report the collapse of the company before it had actually failed, adding that Sky News had "harassed" accountant Ernst & Young into bringing forward the administration that meant many workers heard on Christmas Day, which he described as "evil".