On 17 March, ferry operator P&O sacked around 800 employees without a shred of notice or consultation – a decision that was met with almost universal contempt from MPs, trade unionists and campaigners.

The employees – many of whom were only notified by a pre-recorded video message – have since been replaced by an agency workforce on significantly reduced terms and conditions of employment, which had been organised behind the scenes in the months preceding the announcement.

Here, our trade union law expert, Neil Todd, outlines what happened and what needs to be done to ensure employers do not follow in the footsteps of P&O.


The law

P&O failed to adhere to any of the basic requirements of UK employment law. Dismissals on the grounds of redundancy without any consultation means that individuals with more than two years’ service would have been able to bring claims for unfair dismissal.

There was also a breach of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (Tulrca), which states you must consult with the recognised trade unions if 20 or more employees are being made redundant within a 90-day period. When there are more than 100 employees involved – as was the case here – consultations should begin at least 45 days before the dismissals.

In addition, there is a duty within the same Act to notify the Secretary of State if you are proposing to make 100 or more employees redundant. However, initial objections to P&O Ferries actions on these grounds failed to recognise the changes made in the Seafarers (Transnational Information and Consultation, Collective Redundancies and Insolvency Miscellaneous Amendments) Regulations 2018, which were signed off by the then transport secretary Chris Grayling.

Under these regulations the duty was to give notification to the competent authority where the vessel is registered. The crews worked on a sea-going vessel which was registered in ports outside of Great Britain, namely Cyprus, the Bahamas and Bermuda, while staff were paid by Jersey-based entities. The potential breach of that distinct duty, separate to what was owed by P&O to its employees, is being investigated by the government’s Insolvency Service.


What was P&O’s position?

P&O clearly made a decision not to engage with any process that would require it to consult on how it might be able to avoid redundancies, reduce the number of redundancies or mitigate the consequences of any redundancies as required by section 188 of Tulrca. It instead made the cynical decision to “buy off” the employees’ rights by offering compensation under a settlement agreement. Only one former employee, a chef, has refused this offer and had embarked on legal action.


What can be done to ensure this does not happen again?

When the government introduced the National Minimum Wage (Offshore Employment) (Amendment) Order 2020 it excluded several ferry routes. This was something that was noted and criticised at the time but the government chose not to act and merely intimated that it was open to exploring other options in the future to address this. The government says that it will now close this loophole and those working on the ferry routes previously excluded will be paid minimum wage rates.

However, that is only a small part of the story here. What this case really showed is that notwithstanding the fact P&O knew it was breaking all of the fundamental tenets of UK employment law, it pressed on regardless. This is because it knew that even though it was breaching statutory requirements, the law did not actually stop it from doing so. While it inevitably knew it would face claims of compensation from workers that was a problem for another day that it hoped it could resolve by means of offering payments under settlement agreements.

It highlights the fact that there is no readily available legal mechanism that the workforce could rely upon to obtain immediate relief in circumstances where the employer makes no attempt to follow the law. UK employment law needs this if employers are going to be effectively deterred from behaving like this in the future. The alternative is that some employers will choose to breach legal obligations and simply offer workers some compensation for having done so if they perceive this to be to their overall financial or commercial advantage.

A further change required is that financial penalties imposed upon employers who decide not to follow the law must be made significantly more stringent. An employer would think much more carefully about not even attempting to collectively consult if was going to be required to pay a year’s salary to each affected employee as opposed to 90 days’ pay.

With our current government we have serious doubts any of this will happen – employees have been waiting for an Employment Bill since December 2019 and there’s no sign of it yet. In the absence of action by the government, the behaviour of P&O will be seen by unscrupulous employers as an open door for them to behave just as callously.


Lessons for employers

It is difficult to envisage how the P&O Ferries brand could have been more badly damaged because of its actions. The company has been universally condemned. Most employers will be alive to this and will recognise that to grow and prosper they need a workforce who feel valued and secure, as they are the most important asset to any organisation.

The decision of P&O Ferries not to engage with its recognised trade unions is a particularly damaging aspect of the approach it adopted. Reasonable employers will recognise that in difficult times it is more important than ever to work collectively with the unions who represent the workforce, to be open to the ideas that they have to address problems in the workplace and to have a commitment to finding solutions through collective consultation.