Why not to follow P&O’s example
Last week P&O dismissed 800 employees on grounds of redundancy. They terminated employment by video without any consultation or notice. They took the decision that, instead of complying with their legal obligations, they would simply offer compensation to the employees under a settlement agreement after termination. Under a settlement agreement the employees would be paid a financial sum in return for agreeing not to make any claims against P&O. Seems like a great idea right?
Wrong! As an option it is a valid one; but it comes with massive reputational damage, huge financial exposure, potential criminal conviction and a whole lot of hassle. There’s no guarantee the employees will accept the terms of the offer leaving P&O exposed to litigation.
In dismissing in this way P&O breached the requirement for collective consultation, failed to comply with their legal obligation to notify the Secretary of State of potential redundancies and there’s no doubt at all that the dismissals were unfair.
Assuming no specific exemptions applied, Collective Consultation rules would have required P&O to carry out a minimum of 45 days consultation with the relevant unions before issuing any notices of termination. There is a requirement to consult the union about ways of avoiding dismissals, reducing the number of dismissals needed and mitigating the consequences of such dismissals. P&O simply ignored that obligation. A failure to do so means all employees have potentially claims for a Protective Award, which is anything up to 90 days pay per employee.
The dismissals are clearly unfair and employees have potential claims for up to a full years’ salary (depending on their ability to find alternative work) along with their redundancy pay, notice pay and holiday entitlement.
Realistically it could cost P&O anything between one and two years’ salary per employee they’ve dismissed. On top of that with replacement agency staff leaving vessels P&O are struggling to restart sailings due to lack of crew. Hardly a good way to save costs and the business when the basis for the dismissals was financial losses.
As for the requirement to notify the Secretary of State, if an employer proposes to dismiss over 20 employees there is an obligation to notify the government of the intention ahead of time. A failure to do so could result in criminal sanctions for those involved in the decision.
We’ll have to wait and see what the consequences will be for P&O and their Executive. They may argue the rules do not apply to some of the staff as anybody employed on board a ship that’s registered in a port outside Great Britain, whose employment is wholly outside Great Britain or who is not normally resident in Great Britain would not have the same protections. Further, if staff are classed as “Seafarers” under the Maritime Labour Convention they would be subject to the laws of the vessel’s country of origin. If the ships are registered to foreign ports the staff’s rights could be dictated by foreign jurisdictions.
Treating employees with such distain always has its consequences. Whilst following procedures may take longer the financial and reputational savings make patience and a bit of compassion well worth it.
Author: Sarah Edwards, Senior Employment Law Solicitor