An Employment Tribunal has ruled that City Link failed to properly consult with its employees ahead of its administration in December 2014, and has awarded over 700 ex-staff a maximum pay-out of around £2.5m.

In a case brought against the collapsed parcel carrier by 340 former employees, the Leeds Employment Tribunal said the firm had failed in its obligation to consult with its workforce ahead of redundancy.

The tribunal found City Link knew it was in financial trouble with administration likely, and tried to disguise what was happening.

Some 709 former staff from depots all over the UK are to be awarded damages of 90 days’ pay, capped at eight weeks – a maximum of £3,800 each – which is to be paid by the Department for Business Innovation and Skills. City Link must pay tribunal fees.

In the tribunal’s decision last month following a three-day hearing from 18-20 April, judge Davis said staff dismissals were foreseen as a possibility and “planned over some weeks and months”.

Meanwhile, five further ex-City Link staff in Northern Ireland have won a maximum redundancy pay out in a second case before the Industrial Tribunal. Last year 10 former employees at the firm’s Belfast site won a similar group action case.

Chloe Themistocleous of JMW Solicitors, which represented the former City Link staff in Northern Ireland and the UK, said: “The claim was strongly defended by the government and we are pleased that the judge felt City Link should have done more to consult with their employees when they knew the company was in trouble”.

Former City Link directors David Smith, Robert Peto and Thomas Wright were last year cleared by Coventry Magistrates’ Court of failing to inform the government of the impending redundancies. It found they believed a sale could be achieved before the company appointed an administrator on Christmas Eve 2014.

About 2,500 staff were
made redundant after the firm saw a net loss after tax of £44.4m for the year to 24 Dec
ember 2014. Non-preferential creditors were owed £27.2m as of July 2015.