Can other businesses learn from the recent P&O employment law saga?

“Tell Mike it was only business. I always liked him.” So says Salvatore Tessio in The Godfather, shortly before being executed for plotting the assassination of Michael Corleone.

It’s a line that I often think of when advising on employment matters.  However much organisations might try to do the right thing, when an employer ends an employment relationship it usually feels quick and brutal to the unfortunate employee.

Now, I am not saying that P&O have acted like New York mobsters, and the P&O Ferries case is an extreme example.  However it does highlight the question that sits at the heart of most employers’ thought processes about ending an employment relationship: what is it going to cost me?

P&O Ferry

I understand that P&O’s Chief Executive has acknowledged that the company’s approach broke the law.  I am not going to comment on that further.  My point is that employment law leads employers to treat the law as little more than a cost of doing business, and if the benefits of not complying outweigh the costs of not complying, then many will decide not to comply.

This transactional nature is hard-wired into the system.  Employment rights are bought and sold. If the parties cannot arrive at a price between them then ACAS joins the process, acting as an honest broker. If they cannot facilitate a deal then ultimately the issue is outsourced to an employment tribunal, which decides whether or not a price should be paid and, if so, what that price is.

The strength or otherwise of each party’s bargaining position is affected by how badly the employer is perceived to have acted, and the financial consequences of that for the individual.  Other matters also come into play: publicity, time and hassle, the depths of each party’s’ pockets, and the general appetite for litigation and conflict.

When push comes to shove, most employers will offer a sum of money.  The employee (or ex- employee) will negotiate around that, and there will be a deal, backed up by a confidential settlement agreement.

This is a highly transactional approach, that I believe has affected how UK employers view and manage disputes and conflict within the workplace.  It brings to mind another line from The Godfather: “I’m gonna make him an offer he can’t refuse”. Ultimately the employer controls the purse strings, and the employee needs to eat.  Therefore a financial settlement will stop all manner of serious disputes becoming more serious: If it is presented properly and pitched at the right level it is highly likely that a settlement can be achieved, because in reality the employee has little choice. 

That is the situation that the P&O Ferries (ex) employees are now in, and I would expect most or all of them to take the settlements offered, because the consequences of not doing so are an uncertain, long-winded and complicated legal process that is unlikely to result in them receiving more than they have already been offered.

So we may deplore P&O’s approach, but it is perfectly rational given the system of legal rights that we have in the UK.

However, we need to recognise that the system we have diminishes the employment relationship, and all the valuable work that organisations have done in recent years to recognise the importance of ‘good work’, as Peter Cheese of the CIPD put it: “work that is engaging, gives people a voice, treats them fairly, is good for their wellbeing, and helps them to progress”. 

There are better ways of resolving work-place conflict, that are good for employers and employees.  However implementing them requires us to acknowledge the short-comings of the current system, which drives decisions such as those taken by P&O.  Over the next few weeks I will be posting a series of articles that looks at the problems of the current systems, and what we can do – as employers, HR professionals and employment lawyers – better. 

Matthew Cole specialises in Employment Law, and also Data Protection and Information Security Law.  

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