MPs have called on the government to overhaul rules governing insolvencies to better protect agency and self-employed workers, following the collapse of delivery firm City Link over Christmas.
In a report conducted by the Business, Innovation and Skills Committee and the Scottish Affairs Committee which are investigating the business’ fall into administration on Boxing Day, MPs said it was cheaper for firms to pay a fine for breaking the rules rather than giving workers redundancy payments.
The committees said City Link and its private equity owners Better Capital were “morally, if not legally, responsible for the difficulties that many individuals and small business now find themselves in.”
It said self-employed staff and contractors had been deceived by the company because they had been encouraged to take on additional staff and vehicles and to work longer hours in the run-up to Christmas.
“We are dismayed that, although it was clear for some time there were serious questions over the ability of City Link to continue trading after December 2014, small businesses and self-employed drivers working for City Link were encouraged to take on additional costs despite a strong possibility that they would not receive payment for a significant part of their work in December,” the report said.
MPs added that by not telling staff the true position of the business it was “deliberate deception by omission.”
More than 3,000 workers lost their jobs on Boxing Day when City Link collapsed, including 1,000 self-employed van drivers and agency workers.