P&O Ferries scandal: Was laying off 800 employees legal?

UK ministers have asked the government’s bankruptcy service to investigate whether P&O Ferries broke labor laws by sacking 800 UK-based seafarers and replacing them with agency workers.

The operator, owned by Dubai-based DP World, provoked one angry backlash by ministers and union leaders with their decision on Thursday the crew abruptly dismissed without prior notice.

Peter Hebblethwaite, chief executive officer of P&O Ferries, said in a letter to the remaining staff presented to the Financial Times that the radical decision had been made to “reduce our crewing costs by 50 per cent, secure the future of our business and set it on course for growth to align”.

But in a separate letter to P&O Ferries on Friday, Business Secretary Kwasi Kwarteng said the company appeared not to have followed proper legal process and that he had asked the Bankruptcy Service to investigate. Meanwhile, he asked the company for an explanation “why you think these rules don’t apply to you.”

Nautilus International, a union for British, Dutch and Swiss seafarers, said it believes P&O acted illegally by failing to start a consultation process or notify the Business Secretary before the dismissal.

Alan Bogg, a professor of labor law at Bristol University, said P&O’s action appeared to be a “clear breach” of its obligations under the Redundancy Act.

The P&O Spirit of Britain berthed in the Port of Dover after P&O Ferries suspended sailing
The P&O Spirit of Britain berthed in the Port of Dover after P&O Ferries suspended sailing © PA

A company that has to make 20 or more employees redundant within 90 days is required under UK law to hold a consultation before dismissing the staff. Eight hundred P&O crews were notified Thursday that their employment would end that evening. A company laying off more than 100 employees must also notify the business secretary in writing of the intended layoffs before notifying employees that their contracts will be terminated and at least 45 days before the layoffs begin.

P&O declined to comment on whether it had complied with its legal obligations.

The workers laid off on Thursday were employed by a Jersey recruitment agency. However, Nautilus maintained that their jobs still fell under UK resident law and protection as that was the jurisdiction set out in their contracts.

Does it matter that P&O pays compensation?

Hebblethwaite told employees on Thursday that the company would provide “extended severance packages” to laid-off employees to compensate for the failure to fire.

Neil Todd, a partner at Thompson Solicitors who advises the RMT union, said P&O is effectively buying out its obligations under UK law by offering staff 13 weeks’ pay on top of a severance package – equivalent to the penalty it would have on wages , if a labor court has found a violation of the collective counseling requirement.

In an “extreme scenario, such as the company going bankrupt or . . . a crisis that could not have been foreseen,” an employer could have a defense for failing to follow proper process, said Richard Fox, employment law partner at Kingsley Napley.

But firing people to replace them with cheaper contract workers “doesn’t sound to me like the kind of emergency situation the court would be looking for,” he said. “My guess is that they priced in the worst that could happen and then just offered that payment.”

Can this end up in court?

It’s possible the unions would seek an injunction to force P&O to consult workers, labor attorney Alex Mellis said.

Darren Procter, RMT national secretary, said the union is advising workers not to sign severance agreements just yet while considering legal action.

However, workers would gain little from winning a wrongful dismissal claim since they were offered improved dismissal terms, Nautilus said.

Jo Mackie, head of labor law at Slater and Gordon, who represents Nautilus, said it might make sense to set an example for P&O by taking it to court.

P&O could also face separate government action if found not to have properly informed them of the layoff plans. Otherwise, it is a criminal offense for which both a company and its directors or managers can be prosecuted. Kwarteng said in his letter to P&O that a breach could result in an unlimited fine.

Are UK employment protections strong enough?

P&O retained staff employed under Dutch and French contracts because those countries’ labor law protections were stronger than those of the UK, RMT’s Procter said.

The company’s action exposed the weakness of the UK’s labor market enforcement system in “a situation where there are very large, well-resourced employers making decisions to deliberately flout the law,” said Bristol University’s Bogg.

The trade union congress called on the government to urgently introduce an employment law to strengthen protections in the workplace and impose severe penalties on employers who break the law.

“What happened at P&O is a national scandal – it must never happen again,” said Frances O’Grady, general secretary of the TUC. “This must be a turning point for workers’ rights in the UK.”

Michael O’Dwyer, Harry Dempsey and Delphine Strauss in London and Ian Johnston in Dover with additional reporting from Peter Foster P&O Ferries scandal: Was laying off 800 employees legal?

Adam Bradshaw

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