Can P&O do that?
The news that P&O Ferries sacked 800 workers on 17 March by pre-recorded video call and with immediate effect, replacing them with cheaper agency staff ‘to secure the future viability of [our] business’ has been widely reported, along with suggestions that the law should be changed to prevent this kind of behaviour by employers.
If we assume that the employees have a sufficient connection to the UK to be able to rely on the statutory protections given to UK based employees, the law as it stands does already offer remedies to the dismissed staff, although orders for reinstatement or re-engagement or the granting of interdicts to prevent the dismissals are unlikely and P&O and its directors may avoid criminal charges.
Remedy for failure to collectively consult
Employers must, when proposing to make 20 or more staff redundant within a 90 day period, engage in a process of collective consultation with staff via recognised trade unions or staff representatives, with a view to avoiding or minimising the impact of the redundancies. The Westminster government has confirmed it was not informed of P&O’s proposals 45 days in advance of the dismissals as required by the applicable legislation – though it was advised by P&O of the proposals on 16 March. Failure to collectively consult is likely to result in a protective award being made for every affected employee, of up to 90 days uncapped pay each. Assuming therefore 800 staff at minimum wage are paid £62.37 per day and each awarded 90 days uncapped pay, P&O is facing claims worth up to £4.5m under this heading alone.
Entitlement to Notice
Employees will be entitled to notice – as a minimum one week and after two years service, increasing by one week for each completed year of employment to a maximum of 12 weeks. Assuming a mix of staff with an average notice entitlement of 4 weeks each, that’s a further bill of up to just under £1m.
Entitlement to Redundancy Pay
Employees will in addition, be entitled to a redundancy payment. Again on the optimistic assumption all employees are younger, shorter service employees with an average of 4 years’ service, that’s a further £1m or so and could very well be significantly more.
Remedy for Unfair Dismissal
Unions will no doubt be advising the dismissed employees in addition on their rights to claim unfair dismissal – failure to follow a fair consultation (or any) process is likely to make dismissals procedurally unfair. Although P&O may argue for compensation to be limited – on the basis that consultation would have made no difference to the eventual outcome – even if accepted, compensation is still likely to mount up to around £1.5m. Given the level of sympathy tribunals will have for the staff, it could well be higher.
It’s possible that P&O simply did the sums and concluded it was cheaper to act as it did and dismiss with no procedure, given the yearly losses of £100m it described. Commercially and looking at the costs above, that may be true. However it hasn’t factored in the industrial relations issues it has stored up for itself in the future, nor the very significant reputational damage this will undoubtedly inflict and which will dent income for some time.
Criminal Offences
A final remedy lies with the criminal courts. Both the Company and directors/officers may be charged with a criminal offence of failing to appropriately notify the Secretary of State of the collective redundancies 45 days in advance of the dismissals. Directors, managers or other officers will be liable where the failure was with their connivance or consent or because of their neglect. On conviction the Company and its culpable officers can be fined an unlimited sum. The defence of ‘special circumstances’ which makes it not reasonably practicable to formally inform the Secretary of State is rarely accepted and is highly unlikely to be made out on the facts here. In the past such prosecutions have been rare, but in recent years, prosecutions have been brought, for example against the directors of City Link and Sports Direct – in cases arguably less shocking that this.
P&O may however escape such sanctions because the relevant ships were registered in Cyprus and the Bahamas – a 2018 statutory instrument removed the requirement to notify the secretary of state of collective redundancies on overseas registered ships.
Doing the sums and making tough decisions in difficult economic times is important for employers. It remains vital however to act fairly towards employees and follow clear and well trodden procedures to minimise the impact on staff of those tough decisions and to ensure compliance with the law, avoiding sanctions, including criminal sanctions, and serious adverse effects on the future viability of the business as a result.
If you are considering redundancies on a small or large scale, contact one of the team to discuss best practice and procedure.
