P&O Ferries seafaring staff – 800 employees in total – were told via a Teams a call they were being dismissed the same day. No notice, no consultation.
The backlash was immediate and the government then waded in saying there would be reprisals. But what should P&O have done and can they fix it?
Large scale redundancies are unfortunately nothing new. They can be caused by a variety of circumstances which may be beyond the employer’s control.
The fact they are nothing new is reflected in the legislation which sets out that if an employer is planning to carry out large scale redundancies – 20 or more within a 90 day period - the employer must inform and carry out collective consultation with union or other workplace representatives before the redundancies come into effect.
There are also obligations to notify the government when these things are planned, with specific rules for boats and shipping which involve notifying the governments of the registered vessels. If, as was the case with P&O Ferries, the employer is seeking to dismiss more than 100 employees with a 90-day period, failure to inform and collectively consult can lead to awards of 90 days pay per employee from the Employment Tribunal. There are also potential claims for unfair dismissal with compensatory awards of up to one year’s salary.
So, is this going to be an expensive and damaging episode for P&O? The government in the form of Boris Johnson and Grant Shapps seemed prepared to intervene raising questions about when the state should get involved in matters under the jurisdiction of the courts and tribunals.
Could there be light at the end of the tunnel for the staff? P&O Ferries announced a compensation package - this sounded promising - £36.5 million in compensation with about 40 former employees to receive six-figure sums.
This is where settlement agreements come into play. These can be used to compromise potential Employment Tribunal claims including claims for unfair dismissal. Even in these circumstances, which on the face of it appear clear cut, there could be arguments looking at the specific facts. An Employment Tribunal might consider the dismissals unfair but order reduced compensation because even if a proper process had been followed the end result would have been the same – known as a “Polkey” decision after a case of the same name.
There has been debate about the rights and wrongs of P&O looking to “buy off” legal breaches. This is certainly lawful as statute specifically permits this to happen, with a balancing requirement that any individual entering into one needs independent advice from a solicitor or other defined suitably qualified individual. In this case it is the extent, manner and timing of the actions of the employer that have brought this into question.
Where P&O could have a problem is using settlement agreements to settle claims for failure to inform and consult in respect of collective redundancies as these sorts of claims cannot be compromised via such agreements although failure to pay protected awards for failure to collectively inform and consult can.
So, will P&O be faced with a large class action claim brought by the Unions? Here we come down to practicalities. With the cost of living and inflation running high, staff may prefer to sign on the dotted line and take a lump sum and hopefully give themselves time to find other work rather than see a protracted legal battle through to the bitter end. It may be harsh economic reality that determines the end result.
Whatever the outcome the key to navigating such choppy waters is to get advice in the first place and understand the risks involved.
PardoesSolicitors