P&O sackings: Is ferry operator’s decision legal?

After the firm fired 800 employees on the spot via a pre-recorded video, People Management explores the legalities of the ‘inhumane’ move with employment law experts

P&O sackings: Is ferry operator’s decision legal?

Experts have widely criticised P&O Ferries following its decision to fire 800 staff without notice via a pre-recorded video, released yesterday morning (17 March).

Employees were told “your final day of employment is today”, in the virtual announcement, which informed employees that they were to be dismissed “on grounds of redundancy” and that vessels will primarily be crewed by cheaper agency workers going forward.

He also told them the company had been making a £100m loss year-on-year, which had been covered by its parent, Dubai-based DP World.

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The company had received almost £15m in government grants during 2020, some of which was used to fund staff furlough payments.

And while redundancies at a struggling firm are to be expected, P&O has attracted widespread condemnation for the manner in which they were conducted, and many have questioned the legality of the move.

Unions RMT and Nautilus International have staged demonstrations at ports including Hull and Dover, as security guards were seen escorting workers off ships.

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Nautilus announced that it would employ “its full resources” to support employees, while RMT called the situation "one of the most shameful acts in the history of British industrial relations".

And the TUC said the scandal must be a “turning point” for employee relations in the UK, and called for an end to fire and rehire practices; an increase to the fines for companies that break employment law; and to ban other exploitative practices.

It also called on the company to “immediately” reinstate sacked employees “without loss of pay”, and that it should face “serious consequences” if it failed to do so.

Rustom Tata, chair and head of the employment group at DMH Stallard, said that the company’s approach ignored the “basic fundamentals of employee relations”. It appears to want to “avoid having to renegotiate terms with staff and their representatives” by replacing employees with agency workers, he added.

Kate Palmer, HR advice and consultancy director at Peninsula, said that the announcement would be “detrimental” to employee relations, but that the company could avoid tribunal claims if staff accepted redundancy packages.

"Adequate offboarding processes will be fundamental here” she said. “A reasonable employer would consider offering support through an employee assistance programme, interview and CV preparation training and the provision of strong references”.

However, the company should expect an “influx” of unfair dismissal and failure to consult claims, she added, after union Nautilus International announced that it would support employees with their claims: these would appear to have “a reasonable chance of success”, she said.

Adam Pennington, senior employment associate solicitor at Stephensons, agreed that P&O failed to comply with the minimum consultation period: “Where 100 or more redundancies are proposed, as in this case, the minimum period of consultation is 45 days,” he said.

Barry Ross, partner and director at Crossland Employment Solicitors, pointed out the company may have utilised a loophole: if employees fall under the definition of seafarers, then they would be governed by the Maritime Labour Convention instead of UK employment law, he said.

However, if this were not the case, the company would face “significant ramifications” for failing to consult unions for 45 days and for filing an HR1. The company may have to pay 90 days’ full pay for each employee, capped at a year’s salary, but added that it is likely that most staff will take the enhanced compensation terms.

Rachel Suff, employee relations adviser at the CIPD, said that while it is a “harsh reality” that organisations may have to make job cuts, sacking staff “on the spot” is “inhumane and very difficult to justify”.

“Businesses that fail to meet their legal and moral obligations to consult and treat people fairly face significant risks and costs” she said. The company could also “suffer long-lasting damage to staff morale and employment relations, as well as to its reputation and brand”.

And Martin Williams, head of employment at Mayo Wynne Baxter, said that the company will have “priced in” the probability of legal challenges, calling its approach a “cold calculation” which shows the “fragility” of employment legislation.

“While offshore work is subject to its own legal peculiarities, public attention has been drawn to long-expressed concerns about the extent and strength of employment rights more generally” he said.