Lessons from P&O Ferries

The highly publicised decision by P&O Ferries to make redundant a significant proportion of its workforce, appeared likely to have significant consequences, and potentially lead to legal changes. Now is a good time to look back on the saga so far.

Unfair dismissal

It should be clear that the actions of P&O do amount to unfair dismissal with the lack of consultations demonstrating an obvious lack of forethought by P&O to try to comply with employees’ rights. However, it is questionable whether actually holding consultations would have made a difference to the end result, in any event. This may have had the effect of significantly reducing any compensation in the event that claims were made.

Collective redundancies

Dependent on whether the crew were employed in the UK, the lack of consultation prior to the collective redundancies in question may have breached the requirements set out in s.188 TULR(C)A 1992 through not undertaking consultations (s.188(1)) and failing to comply with the 45 or 30 day limit (s.188(1A)) required to allow for such consultations to take place. Failure to do so may trigger claims of protective awards of up to 90 days’ pay per employee.

Duty to notify the Secretary of State

Under s.193 TULR(C)A 1992, P&O should have notified the Secretary of State of their intention to make over one hundred of their employees redundant, on failing to do so they may have committed an offence under s.194, leaving them liable to an unlimited fine.

Image removed.

Has P&O been successful?

Now the question turns to whether P&O have ‘gotten away with it’. This can be viewed in a number of ways:

  • Firstly, it seems unlikely that P&O will receive any significant unfair dismissal claims with only having received one claim to date.
  • Secondly, the likelihood of P&O being prosecuted for their actions is again low, as prosecutions within this area are infrequent and the consequence for prosecution of an ‘unlimited fine’ is usually, in reality, in the low thousands.
  • Finally, P&O have arguably achieved what they set out to do. They have made a significant amount of people redundant without much legal recourse and as such have only had to pay slightly over the odds on settlement agreements to accomplish this goal.

Additionally, with regard to triggering new legal reform, the case of P&O seems to be in an awkward place for a legislative response. Many of the Government’s newly proposed commitments are likely to be unworkable, particularly where international maritime law is involved.

What can we learn?

As is already frequently used by employers, settlement agreements have again shown their value for P&O through effectively buying employees’ rights to claims in an effort to avoid potentially greater legal costs that could have come with more than seven hundred unfair dismissal claims.

However, employers should be mindful of the deeper consequences from taking such extreme actions. The unquantifiable value lost from the media backlash cannot be seen immediately, we must therefore wait to better understand what damage P&O have caused to both their future relations with companies and the brand image as a whole.

Vanessa Bell
Matthew Cole