Sports Direct CEO to face criminal charges over warehouse staff redundancies
Dave Forsey thought to be first FTSE100 chief to be charged under Trade Union Act
The chief executive of Sports Direct, Dave Forsey, has reportedly stepped down from his post just days before he was due to face criminal charges over the mishandling of staff redundancies.
On Friday 9th October, the Insolvency Service announced that Forsey had been charged after failing to inform authorities of plans to lay off staff from the Dundonald warehouse in Scotland. The redundancies were made in relation to the controversial pre-pack administration of wholly-owned fashion chain West Coast Capital (USC), in January this year.
Around 200 workers at the USC site were given just 15 minutes notice by administrators that they would be losing their jobs, before the company was shut down.
Under employment law, this number of workers should be given a minimum period of 30 days consultation before losing their jobs.
Forsey reportedly resigned from Mash Holdings, the holding company for Mike Ashley’s investments, where he had been company secretary for 10 years, on 1st August 2015. He was due to appear in court on 15th August but the hearing has been adjourned until next week (14th October).
A statement from the Insolvency Service read: “We can confirm that criminal proceedings have been commenced against David Michael Forsey. He is charged with an offence contrary to section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992.
“The investigation into the conduct of the directors is ongoing. The inquiries are at an early stage and given the criminal proceedings it is not possible nor would it be appropriate to comment any further.”
This is thought to be the first time a FTSE100 chief has been charged under the Trade Union Act. If found guilty, Forsey could be fined up to £5,000 and banned from holding directorships for up to 15 years.
At a Glasgow tribunal earlier this year, Sports Direct chiefs were found to have breached EU rules by not informing staff that employment was at risk in a timely manner. Fifty former USC employees received a “protective award”, the equivalent of 90 days’ pay.
The Independent newspaper claimed that the taxpayer has lost around £700,000 in the administration of USC because of unpaid tax bills and redundancy payments.
At a Scottish Affairs Select Committee hearing in March this year, Keith Hellawell, chairman of Sports Direct, revealed that he was only informed of the administration a day before it was finalised, despite executive board members discussing it with administrators at least two months previous.