The act of bringing these cases matters more than any conviction

Outlook

Three former directors of parcel firm City Link will appear before magistrates in Coventry to answer charges connected to its collapse next month (PA)

When a business is in danger of going under its bosses are supposed to notify the Government of any plans for mass lay-offs at least 30 days before the axe is swung.

The requirement is a relatively small, but nonetheless important, part of the rather stodgily named Trade Union and Labour Relation (Consolidation) Act of 1992.

Directors who fail to do so can face prosecution. But despite the many insolvencies that have taken place since then, not one of them has. Until now.

Now there are two cases under way. Dave Forsey, chief executive of Sports Direct, has just pleaded not guilty to charges brought under the Act over 200 job losses at the Scottish warehouse of collapsed fashion chain USC, with a trial expected next year.

Meanwhile, three former directors of parcel firm City Link will appear before magistrates in Coventry to answer charges connected to its collapse next month.

The cases have been brought as the Government prepares to publish its response to a consultation that considers the treatment of staff at firms teetering on the brink and looks at whether the existing rules covering it need tightening.

Let me make it clear: I make no comment on the guilt or innocence of those involved in the cases cited. However, the fact they have been brought by the Insolvency Service is a welcome development.

The collapse of a business will never be anything other than a horribly painful event for anyone connected with it.

Sometimes directors who are struggling to breathe may be tempted to ignore inconvenient regulations in the hope of something coming along to pull them out of a hole. Some, however, may do so out of a callous disregard for them.

It speaks volumes that Morgan Redwood, which runs leadership programmes, has just issued the results of a survey which found that 13.2 per cent of board members at more than 250 businesses regarded employees as a “necessary evil”.

That finding is disturbing, but perhaps not terribly surprising in the light of research published by The Independent this week that found corporate chief executive to be the job of choice for psychopaths.

At a time when corporate executives have repeatedly refused to take responsibility for either their actions or inaction, or for the cultures they instill (see scandals, banking), a willingness to take action where breaches may have occurred sends out a valuable message. So in a sense it doesn’t really matter whether convictions are secured.

The one concern I have is that both of the above cases have become cause célèbre that received wide media attention.

The consultation I mentioned, on which future cases may be dependent, was set in motion by the now ex-MP Jo Swinson towards the end of the last Parliament. The new Government’s response to it may show us its true intent on this issue.