Has P&O Ferries breached employment law by firing 800 UK-based sailors and replacing them with agency staff?
This is the question to be considered by the Insolvency Service which has been asked to investigate the matter by Kwasi Kwarteng, Secretary of State at the Department of Business, Energy and Industrial Strategy. In this article Elizabeth Judson discusses the legal aspects of the situation that the Insolvency Service is likely to be taking into account.
On 17 March 2022, P&O Ferries fired 800 staff without notice via a pre-recorded video. According to reports, employees were told ‘your final day of employment is today’ and that the employees were being dismissed on the grounds of redundancy, with vessels being primarily crewed by agency workers going forwards. This was said to be due to P&O Ferries making a £100 million loss year-on-year which had been covered by its parent company, DP World.
Nautilus International (‘Nautilus’), a trade union for British, Dutch and Swiss seafarers said that it believed that P&O Ferries had acted illegally by failing to launch a consultation process before making the redundancies, or to notify the business secretary.
Under UK law, when a company is dismissing more than 100 people, it must notify the business secretary in writing of the proposed redundancies before commencing a collective consultation process at least 45 days before dismissing employees.
In an extreme situation, for example where there has been an unforeseeable crisis, an employer may have a defence for failing to follow the proper process, however, in circumstances where an employee is dismissing employees in order to replace them with agency workers, they are highly unlikely to be successful in running this defence.
If a company has failed to notify the business secretary about its plans to make employees redundant, the company and its directors can be prosecuted for a criminal offence, leading to an unlimited fine. Employees being dismissed by reason of redundancy, in a manner such as this, will have claims for both unfair dismissal and a protective award of 45 days’ pay per employee.
However, it is reported that P&O Ferries believe that their treatment of the employees was lawful. Whilst reports are a little unclear as to the rationale for this, there is a suggestion that P&O Ferries believes that its actions are lawful under maritime law. It is possible that if the employees fall under the relevant definitions relating to merchant seaman in section 199 of the Employment Rights Act 1996, certain provisions of UK employment law relating to redundancy and unfair dismissal rights may not apply.
In a statement, P&O Ferries has said that it has offered ‘enhanced severance terms to those affected to properly and promptly compensate them for the lack of warning and consultation’. It has reportedly offered staff 90 days’ pay on top of a redundancy package which is equivalent to the compensation that it would be awarded to pay if an employment tribunal found that it had unfairly dismissed employees and failed to comply with the requirement to collective consult.
Turning down these enhanced redundancy terms in favour of bringing an employment tribunal claim is likely to achieve little. The employees may have to pay legal costs to pursue their claim (albeit unions may assist with this) and employees are likely to have to wait months, if not years, for an outcome and for compensation to be awarded. Therefore, it’s likely to be far more attractive for the employees to accept the enhanced severance terms which have been offered to them.
Perhaps of greater concern to P&O Ferries now will be the potentially lasting damage to staff morale and employee relations and also the reputational damage that it has suffered to its brand.
For advice on Employment Law or HR matters please contact Tom Evans and email him attom.evans@dtmlegal.com
