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IT recruiter Networkers International (NWKI:LSE) will make an exceptional provision of £1 million for the 2012 financial year to cover for all eventualities following a litigation case against the firm in the US. The firm had already set aside £0.6 million and the new provision will add to this sum.
This comes after a California court of appeal last week overturned its original favourable decision and ruled that parts of the claim against Networkers could be certified as a class action, the firm said in a message to shareholders on Monday. The firm is now considering whether to appeal.
The litigation dates back to 2006 when three individuals filed a complaint against the staffing companycalling for ‘unspecified damages’ against a company managed by Networkers which operates overseas. The claimants alleged they were improperly classified as independent contractors and not employees, therefore demanding extra payments for violations of wage and working time laws between 2005 and 2006.
Networkers explained that the claim was styled as a class action but the trial court ruled in favour of the company and denied class certification in 2007, a decision re-affirmed in 2009.
Despite the ruling last week, Networkers said it had a strong defence to all claims.
“This recent ruling did not consider the merits of the case which will only be considered if the case proceeds to trial. Should the case proceed to trial, it is likely to be heard during 2015,” the company said.
The firm said in September that company sales increased during the first half of 2012, but expects profits in the second half to be below last year’s. Networkers is one of the 30 largest staffing firms in the UK.