The legal implications of P&O’s mass sackings

Barry Stanton examines the legality of the ferry company’s decision to unexpectedly lay off more than 800 workers without collective consultation

The legal implications of P&O’s mass sackings

A few months ago we looked on with some dismay when it was widely reported on social media that a US company had called a large group of employees together and informed them as they were on the call that their employment had ended and their services were no longer required. 

There was, among employment lawyers and many commentators, a combined view that such a thing could not happen in the UK because there was specific legislation requiring collective consultation and notification to the secretary of state at least 45 days before the first dismissal. Failure to consult would result in protective awards of up to 90 days’ pay, and failure to notify the secretary of state is a criminal offence.

The news last week that 800 P&O employees have been dismissed in similar circumstances to the employees in the US is a moment for sober and careful reflection. One would anticipate that a company such as P&O will have taken advice about the obligations it owes; the circumstances in which it owes those obligations; and the consequences of non-compliance. (If, indeed, it has failed to comply.)

The relevant legislation is specific: it requires an employer that is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less to consult with appropriate representatives about those proposals. The legislation has been much litigated. Redundancy here means that the reason for dismissal does not relate to the individual employee themselves.

We know from the Woolworths litigation that it is entirely possible for an establishment to be limited to, in that case, individual shops, and not be the entire business. It would be possible for an establishment to be a single ship. Equally, an establishment cannot straddle two separate companies, which means that if there are two or more companies operating from a site there will be separate establishments for each company. If the crews on board the ships were employed by companies located at either end of the route, for example England and France, there may be two separate establishments on each ship. Employees of the foreign company would be subject to the collective consultation laws in their country.

How the P&O corporate world has been set up and by whom the employees were employed will be crucial questions in determining whether P&O has complied with its obligations, as will the determination of each particular ‘establishment’. Even if there should have been consultation, it is still possible for an employer to argue that there were special circumstances that made it not possible to consult. It is unclear whether there are any such circumstances. 

In addition, employees with more than two years’ service have the right not to be unfairly dismissed. Typically, if an employer is seeking to change terms and conditions it will consult and eventually dismiss and offer re-engagement. In those circumstances while there will be a dismissal, employers would hope to be able to persuade an employment tribunal that the dismissal was fair. The fact that there has been no offer of re-engagement is likely to make P&O vulnerable to claims for unfair dismissal which will be capped at the lesser of either a year’s pay or £89,493. 

Generally, when mass dismissals are involved, employers will factor in costs, and it seems that there is a package available to the employees who have been dismissed, although it is not clear what that is. It can be expected that any package will have factored in P&O’s potential liability to employees. 

The other issue to consider is whether there is, or was, a TUPE transfer of the employees of the agency who will be supplying the agency workers. Whether there is such a transfer will no doubt be hotly debated between the employees and the incoming agencies. Failing to consult about a TUPE transfer will also result in protective awards. 

The reaction to the dismissals, in the press and parliament, is not surprising. How the public will react to a business that appears to treat its employees with disdain will also be an issue that P&O will no doubt have taken into account.

Barry Stanton is head of employment at Boyes Turner