Why P&O is a good example of how not to conduct redundancies

The ferry operator’s mass layoffs via video call and without consultation with employees are likely to leave the firm’s reputation damaged beyond repair, argues Shakil Butt

The sacking of 800 staff by P&O Ferries is shocking and a poor reflection on the Dubai-owned business. 

The staff were informed on a Zoom call that last Thursday (17 March) was their final day of employment with immediate effect, which obviously would have come as a shock because no warning was given. The call lasted a few minutes and ended with the staff being made redundant. 

To compensate for the lack of notice, P&O Ferries is giving workers an ‘enhanced compensation package’ subject to them signing a settlement agreement by 31 March and complying in full with its terms and conditions. In addition, P&O is providing support for those affected to get a new job at sea or ashore, as well as confidential support including counselling through its employment assistance programme until June.

The staff are going to be replaced with cheaper agency workers in a move to make cost savings, with P&O stating it was a tough decision and without these changes the business was not viable. The agency staff were already on board ready to take over and there were reports of workers being escorted off their ships by security with handcuffs, adding to the demeaning way the staff were treated. The parliamentary under-secretary for transport, Robert Courts, regarded this as insensitive and wholly unacceptable, with the RMT union threatening legal action and referring to it as one of the most shameful acts in the history of British industrial relations. 

No doubt the pandemic had affected the business, so had this occurred during the period of the lockdown, it would have perhaps been easier to understand, but with restrictions easing and travel resuming it is difficult to understand the timing of this decision. 

Normally, if an employer wishes to make more than 100 staff redundant, it is required to give 45 days’ notice, which does not appear to have happened in this instance. Typically, staff should be warned they are at risk of redundancy and have a formal consultation process wherein alternatives to dismissal are explored. This may still lead to the same end result, but at least there is more time for staff to prepare and for the employer to evaluate all the options. 

P&O reported it was making a £100m loss year on year, so perhaps job losses were unavoidable. However, failing to consult employees in a redundancy situation could mean any redundancies are almost certainly going to be regarded as unfair, should workers pursue a claim at an employment tribunal.

The approach taken by P&O Ferries is certainly ill advised, not just with regards to the impact on the staff being dismissed, but it also sends a message to the remaining staff that they are disposable. Morale among the ‘survivors’ is likely to be low, which is going to affect their service to P&O Ferries customers who are also likely to have their doubts about who they should book with. The reputation of the business is going to be damaged and no doubt its marketing team will be focusing on damage control. 

P&O is a classic case study of what not to do when considering redundancies and this action potentially will leave it adrift at sea.

Shakil Butt is founder of HR Hero for Hire and honorary treasurer of the CIPD