The UK news is awash with the shock of P&O’s mass unfair redundancy dismissals.
P&O Ferries simply sacked 800 employees (a quarter of their workforce) without consultation or giving notice. They were simply told via a video message last Thursday that it was their “final day of employment”. Apparently the video message referred to a “generous severance package” being offered, but no details were given.
The Government’s maritime minister Robert Courts has said he was “angry at the way workers have been treated” and that the employer’s actions were “wholly unacceptable”.
“Reports of workers being given zero notice and escorted off their ships with immediate effect while being told cheaper alternatives would take up their roles, shows the insensitive nature by which P&O approached this issue,” he said. P&O said it took the “difficult decision” as a “last resort” to save the business.
UK employment law requires employers to inform the government and to enter collective and/or individual consultation with employee representatives, such as trade union, where plans to sack 20 or more employees for redundancy within a 90-day window. Clearly P&O have skipped this and fast-forwarded to the dismissal part.
The legal analysis
P&O has said that it can’t afford to run its passenger services going forward and it plans to use much cheaper agency labour instead.
By the way, this is nothing to do with maritime-specific laws and flags of convenience – this is a situation where the UK law on unfair redundancy dismissals definitely applies.
Where an employer fails to follow a fair redundancy process, dismissed employees can bring unfair redundancy dismissal claims before the employment tribunals, with the maximum compensation being up to a year’s salary for loss of earnings.
Firing staff with immediate effect violates the UK legal requirements to give notice and consult with the union representatives. In situations like this the employees can also bring a claim for failure to consult (about the redundancy situation) for which there is a separate award of up to three months’ pay.
The reason that P&O feels able to act like this is that it is willing to pay the cost breaking the law, which is the cost of:
- Pay in lieu of notice (which it would have to pay even if the redundancy dismissals weren’t unfair)
- Statutory redundancy payments (which it would also have to pay)
- Three months’ notice ‘protective award’ as a fine for failing to consult (which it hopes to recoup in perhaps six months of using cheaper labour)
In addition, with unfair redundancy dismissals, there is a ‘compensatory award’ which covers the employees’ losses of earnings, but clearly P&O hopes to avoid that cost (if sued in employment tribunal for unfair redundancy dismissal) by showing that since the redundancies would have happened anyway, any loss of earnings didn’t flow from the unfair redundancy dismissals. This is what lawyers refer to as the ‘Polkey defence’.
We predict that P&O Ferries will see a large number of unfair redundancy dismissal and failure to consult claims. Though P&O may avoid tribunal claims by paying notice, redundancy payments and even the full protective award,
- We don’t think that they will be offering anything else, as they will say that the loss of earnings claims would be zero.
- We think that they will pay at least some of the compensation soon (for PR reasons)
- We think they may try not to pay the full protective award, on the basis that they can get a cashflow advantage by leaving it until a tribunal forces them to, in a year’s time.
The unions are very angry. You can bet that if P&O don’t pay the protective awards of three months’ pay, the unions will lodge a mass claim, which they will undoubtedly win when it gets to a hearing in a year. if P&O do pay full protective awards soon, the unions may still bring a mass claim, which would likely be an academic victory, since the compensation that’s likely to be awarded would have been paid up front. It remains to be seen whether the unions will bring a claim anyway, as a caution to others or because they think that the so-called ‘Polkey defence’ will fail.
Even if staff accept the amounts that P&O will offer, there are other, political dimensions to this situation in the form of the impact it will have on the employees emotional wellbeing, their families and the local economics.
Update one week later:
P&O’s CEO admits that the company failed to consult because if they had consulted, no union would have accepted their proposals.
The government said that the “loophole” that relieves foreign-registered ships from criminal liability for failure to consult would be closed and applied retrospectively. This law was a law that the Government brought in fairly recently, as required to do by an EU directive, which it is now free to reverse.
The Government seems embarrassed and fearful of the effect of this situation on its electability and this may be why it has, through the Maritime and Coastguard Agency in Northern Ireland, detained a P&O ferry staffed by the cheaper foreign agency workers, citing failures on crew familiarisation, vessel documentation and crew training.