The collapse of City Link has prompted the REC to call for a full government inquiry into the decisions and behaviours of the company’s directors in the prelude to its insolvency.

The call comes in a letter to the secretary of state for business, innovation and skills, Dr Vince Cable, and his Labour shadow, Chuka Umunna. Several REC member recruitment agencies were severely affected by the company’s collapse, with one owed more than £120,000 and another owed £80,000 for its services. These bills were left unpaid when City Link was found to be insolvent.

Despite its financial woes, City Link still permitted intense hiring of temporary drivers contracting through Umbrella Companies and other employment agencies over Christmas.

REC CEO Kevin Green highlighted this point in a statement, explaining: “Agency workers will not be left out of pocket for work they have done, as the employment business will pay them regardless of City Link’s collapse. But that means some of our members are severely disadvantaged by a significant negative impact on their bottom lines.”

It was not obvious at any point that closure was on the cards, Mr Green continued, because City Link’s demand for agency workers over the Christmas period was exceptionally high. Given the financial situation of the company, he said, this now seems surprising.

Mr Green added: “It is not so easy for our members to recoup their losses and whilst they have registered their interests with the administrators, we realise that our members’ interests are part of a very long list.”

An inquiry, he argued, was the best means of discovering how to avoid a repeat of a situation such as this.

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