P&O Ferries has confirmed that around 800 workers are to be made redundant due to the business not being “viable” in its current state.
It is understood that the company intends to use agency staff moving forward.
On Thursday morning, the company announced that it was bringing all scheduled sailings to a halt ahead of a major announcement before proceeding to make a significant amount of its staff redundant.
The announcement was made via a short pre-recorded video message in which an executive read out a scripted messaged informing the workers that due to two years of heavy losses, management was left with no choice but to dismiss the workers and replace them with agency staff with cheaper contracts.
Workers were told that they would receive “enhanced” pay-outs if they “complied in full” by signing their redundancy settlement agreements within two weeks. They were also offered counselling.
The decision is being described as “one of the most shameful acts in the history of British industrial relations” and sees one of the largest sets of collective redundancies in many years.
P&O Ferries stated on Thursday that it had lost around £100million in both 2020 and 2021 describing itself as no longer a “viable business” in its current state. It had also received significant funding from the government’s furlough scheme in relation to the Covid-19 pandemic which Defence Minister James Heappy said should be returned.
Workers have barricaded themselves on ferries in Dover, Hull and Larne, staging a sit-in protest to the decision. Unions are intending to hold these demonstrations to condemn P&O for sacking their staff. RMT (The National Union of Rail, Maritime and Transport) general secretary Mick Lynch said:
“We need to send a message to ruthless employers and the government alike, that when working people are treated so abysmally, there is a militant response from the trade union movement.
“This example of gangster capitalism which our members in P&O have been subjected, is what lies ahead for other workers up and down the country if we do not all take a stand.”
What sums will the affected employees be due?
Any staff made redundant are due, as a minimum, their contractual notice pay, accrued but untaken holiday pay and if employed for over 2 years, a statutory redundancy payment (‘SRP’).
Some employers will have contractual schemes that offer enhancements to the employees, for example such as them receiving a month’s salary for every year of employment, as opposed to the legal minimum of one week for every year (subject to a maximum of 12 years’ service).
So have P&O breached the law?
Technically yes. There have been multiple actual breaches of employment law. The major breaches are of the Trade Union & Labour Relations (Consolidations) Act 1992 (‘TULRCA’).
Firstly, if a company intends to make more than 100 redundancies in 90 days or less, they must provide notice to the affected employees of at least 45 days. This is supposed to act as a moratorium which means the dismissals cannot take effect until the expiry of the consultation period. So, P&O have clearly breached TULRCA.
They have also failed to provide the notice and details to the Department for Business, Energy & Industrial Strategy (‘BEIS’), which they are obliged to do.
There are sanctions for failing to consult, the maximum penalty being an award of up to 90 days gross pay for each affected employee, commonly known as a “protective award”. Given that P&O have made over 800 redundancies – this alone would be a huge sum.
Further by failing to adequately consult with the affected employees it would mean all the staff have potential claims for unfair dismissal as well, as the lack of consultation would make the dismissals unfair.
There are no statutory requirements in terms of the process that should be followed, but case law dictates that as a minimum staff need to have consultation and alternatives to redundancy be explored.
Why has P&O not followed the above?
This is speculation, but ultimately the reality is that P&O likely have the affected employees over a barrel to some degree. They have mentioned in their press releases the business would “not be a viable business without the changes”.
How this can be interrupted is that it is P&O’s way of saying ‘we have breached the law but if we did not make these changes, there would not be a business left to pay out the staff’.
If the business was put straight into administration, it could be the case that the sums owed to the over 800 staff (see section above – what sums will the affected employees be due?) would not be available to pay the staff, and they would then need to make claims to the appointed administrator for the sums.
If there were no sums available to pay them, they can make an application to the government for some elements of the money owed to them to be paid (such as the statutory redundancy payment and notice pay). Therefore by letting the business continue, the staff are more likely to be able to realise the sums owed to them from P&O as a result of the redundancies.
Enhanced Payments?
P&O have announced that all affected staff will receive a “generous severance package” but no details have been released. To employment lawyers any mention of an enhanced payment usually means one thing – a settlement agreement.
A settlement agreement is a legal document whereby the employees agree to receive an enhanced sum but legally waive the right to sue P&O for the breaches of the law (for more on settlements please see our dedicated page).
So, whilst on the face it of P&O could face multiple claims from each employee, such as unfair dismissal, if the employees decide to take the enhanced payments on offer and waive their rights, P&O would then not face any legal action from any staff that sign a settlement agreement.
Firing & Rehiring?
Known as firing and rehiring, this is the practice of making staff redundant and then making them apply for their old roles, or newly created positions that perform similar tasks. Whilst this is legally acceptable in done correctly, this practice has gained a lot of unwanted media attention recently for being unethical amongst other complains.
It should be clear, on the information released to date, P&O are not firing and rehiring. It was announced that P&O plan to staff their ship with agency staff from two agencies and that this will produce savings of up to 50% on the previous staffing costs. At the time of writing, no affected P&O staff have been offered their roles back via the two agencies that we are aware of.
*Update – 24/03/2022*
Due to the fact we reported early on this story there have been some developments that are noteworthy to update you on.
Firstly details have been leaked about the level of compensation offered to the affected workers. It has been reported that staff will receive 2.5 weeks pay for every year of service. This compares to the statutory minimum of one week for every year of service, subject to a maximum of 12 years.
Staff will also be offered an additional 13 weeks wages which P&O have said is to cover “the lack of advance notice” but this is also coincidentally is the same amount that each worker would have ben due as a “protective award” (see above).
It is alleged the total figure due to affected workers is in the region of £36.5m and that some staff will be receiving settlements in excess of £170,000.
P&O has also announced that 575 of the affected 786 staff are in discussions to progress the severance packages – which as mentioned earlier will involve a settlement agreement.
That means at the time of writing, and if those 575 all signed their deals, only 211 staff would be left with possible claims against P&O, and I am sure that number will likely reduce over the coming days.
WHAT TO DO NEXT
If you have been affected by the actions of P&O, and either want advice on your position or advice on a settlement agreement provided by P&O, or another employer than please get in touch with Oakwood Solicitors on 0113 200 9720.
P&O Ferries has confirmed that around 800 workers are to be made redundant due to the business not being “viable” in its current state. It is understood that the company intends to use agency staff moving forward. On Thursday morning, the company announced that it was bringing all scheduled sailings to a halt ahead…
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