P&O Ferries’ recent dismissal of 800 members of staff raises serious questions as to the legality of mass redundancies with immediate effect.
On Thursday morning, news broke that P&O Ferries (P&O) had taken the decision to terminate the employment of 800 staff members with immediate effect. While the story has already attracted national media attention, it is important to understand the potential legal implications behind the decision, which has attracted heavy criticism.
The law on collective redundancy rules mean that an employer proposing to make 20 or more staff redundant within 90 days or less in one establishment must consult on its proposal before any dismissals take effect. If UK employment law applies to P&O’s shipboard staff and they did not consult with those members of staff or their appropriate representatives before announcing the redundancies, they may have failed to comply with their legal obligations. In cases such as this where an employer is proposing to make 100 or more redundancies within 90 days, consultation must begin at least 45 days before the first dismissal takes effect.
Additionally, the employer must notify the Secretary of State in writing of the proposed redundancies before it gives notice to the affected members of staff that their contracts will be terminated. Whether P&O complied with the legal requirement to notify the Secretary of State is currently unclear, as some media outlets have reported that ministers were made aware of P&O’s intention to dismiss its staff. A failure to notify the Secretary of State beforehand is a criminal offence for which both P&O and its directors can be prosecuted and could result in an unlimited fine.
UK law sets out a strict consultation process which should be followed prior to any redundancies. To summarise:
- Consultation must begin in good time. That is a minimum period of 30 days for fewer than 100 redundancies, and at least 45 days for 100 or more redundancies.
- The employer must provide certain information to the appropriate representatives of the affected staff members, such as a trade union. This information includes, but is not limited to:
- the reasons for the proposed dismissals;
- the numbers and descriptions of employees whom it is proposed to dismiss as redundant; and
- the proposed method of carrying out the dismissals, with proper regard to any agreed procedure, including the period over which the dismissals are to take effect.
- Under certain special circumstances, it may not be reasonably practicable for the employer to consult in good time or provide the information required. Under these very narrow circumstances, the employer may have a defence for failing to comply with their duty to consult. Nevertheless, the employer must still try and comply with its duty to consult insofar as it is practicable. If P&O come within the above rules, it is not clear if they are intending to rely on the special circumstances defence.
If P&O have failed to properly consult staff, the consequences are wide ranging. First, an employment tribunal could grant a protective award for up to 90 days’ gross pay per staff member. Second, P&O could be met with claims of unfair dismissal from staff with over two years’ service which if successful, would entitle them to receive compensation. Additionally, the recognised trade unions (such as RMT and Nautilus International) can claim against P&O for their failure to inform and consult. Finally, if P&O failed to properly notify the Secretary of State, they could be held criminally liable and face an unlimited fine.
Aside from a duty to consult, it is also not clear whether the circumstances gave rise to an obligation for P&O to transfer the employment of the dismissed staff over to the new crew provider under TUPE rules. If it is found that a TUPE transfer was required and not carried out by P&O, further protective awards could be granted for the affected staff. This also raises questions surrounding P&O’s compliance with international seafaring law, amidst reports that P&O are replacing the dismissed staff with agency workers from India and other foreign countries.
As the facts surrounding P&O’s redundancies gradually come to light, the company continues to face backlash from the media and the public. Reports of P&O requiring staff to sign NDAs, while not wholly uncommon in the context of settlement agreements, demonstrates that some employers no longer feel compelled to take the moral high road when it comes to treatment of their staff. Regardless of how events play out for P&O and whether their actions are unlawful or not, the company has faced damaging press and no doubt will have an equally damaging impact on industrial relations and it has increased pressure on the Government to increase workers’ rights.
For further information or to discuss the issues raised by this update, please contact our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.
Click here to see our ‘Employment Law Figures 2021’ which includes basic figures, time off work, living wage, minimum wage and tax rates.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
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