Jayne Holliday, Legal Director at Higgs LLP, takes a look at the complex and extraordinary case of P&O Ferries and its decision to dismiss 800 employees.
When it comes to employment law, there could hardly be a more dramatic story than P&O Ferries and the incredible sacking of the entire 800-strong UK crew.
A couple of weeks ago news broke that the maritime giant – a famous brand used by so many Brits venturing overseas – had taken the extraordinary decision to dismiss all of its UK seafaring staff via a recorded Zoom message.
A huge backlash followed with the Government and the Secretary of State for Transport Grant Shapps calling on the firm to reinstate the 800.
But P&O has held firm, saying it had "painstakingly explored all possible alternatives" and any u-turn would cause the collapse of the company and the loss of a further 2,200 jobs.
Shapps responded by branding P&O boss Peter Hebblethwaite a “pirate of the sea”.
There are so many different threads to this story from a legal point of view.
Firstly, Mr Hebblethwaite has admitted that P&O did break the law in not consulting prior to the brutal dismissal. Under UK law, employers planning to make 20 or more staff redundant within any 90-day period must first consult staff and speak to trade union representatives. Mr Hebblethwaite brazenly said: “It was our assessment that […] no union could accept our proposals.”
On those grounds alone the P&O employees could have grounds for claiming unfair dismissal because procedure was not followed and there was no meaningful consultation.
What is less clear, however, is whether P&O was obliged to inform the Government of the job losses in advance. Under UK law, an employer must give the Secretary of State 45 days’ notice if it plans to dismiss 100 or more employees within a 90-day period.
This did not happen – but P&O argues that this did not apply as its ships are registered in Cyprus, the Bahamas and Bermuda rather than the UK. Each of those countries has its own rules.
Many of the employees – more than 500 reportedly - have signed enhanced settlement agreements worth a combined £36.5m. That will preclude them from taking further action such as unfair dismissal, but that still leaves more than 200 people who could pursue compensation, if they can persuade the courts that they are UK-based employees. The maximum award for unfair dismissal is almost £90,000.
And even those who have signed settlement agreements and non-disclosure agreements may be able to bring claims for protective awards. It will be down to the unions to bring those claims on behalf of their members. That could yet prove a big blow for P&O’s coffers - up to 90 days’ pay per individual.
P&O plans to replace the 800 staff with agency staff earning an average of £5.50 per hour, well below the UK minimum wage. Shapps is, understandably, furious about this and insists any business working out of Britain is subject to minimum wage laws. But can the Government close the loophole in a case like this where a business is moving between countries? It will all come down to jurisdiction.
The relevant legislation is set out in the Employment Rights Act 1996 and the Trade Unions Labour Relations (Consolidation) Act 1992, but neither are clear on territorial jurisdiction, which has been the subject of previous legislation. It firstly needs to be established whether their scope applies.
The question will be for each individual, is the employee’s connection with Great Britain significantly strong? My belief is, given they are working from UK ports, they will be able to prove that quite easily. The ships are docked in Britain, the sea staff return to homes in Britain and they are paid in Sterling.
This is an unprecedented situation and it will be interesting to see how it develops in the weeks and months to come. My hunch is that we will see large-scale claims by the unions and moves by the Government to ensure something like this can never happen again.
One thing is for certain, it will take a long time for P&O to repair the reputational damage caused by this sorry saga. And, after all, their business depends on customers.
