P&O Ferries’ Redundancy Scandal – Was it Lawful?

P&O Ferries has claimed it did not break the law by making 800 staff redundant without consultation or warning last week. Subsequently, the company’s actions have ignited a nationwide inquest into the employer’s ethical and legal obligations to its workers.

The company was also accused of hiring temporary staff to replace the workers at rates as low as £1.81 an hour, getting around UK national minimum wage regulations because its vessels are registered outside the UK.

Rachel Suff, an employee relations adviser at the CIPD, the professional body for HR and people development, referred to the decision as “inhumane and very difficult to justify, whatever the circumstance.” Whilst, Boris Johnson, has urged workers to “take action under the 1996 Employment Rights Act”, saying “it looks to me as though the company concerned has broken the law”, and that the government would be taking action as a result.

Ethically, it seems, the public judgment has been set, with widespread condemnation of the move – albeit it remains to be seen how public opinion will impact P&O’s ability to retain its customers and generate new business.

The legal debate, meanwhile, rages on.

What does UK employment law say?

If the normal employment rules applied, P&O Ferries should have begun a consultation with the unions and notified the secretary of state at least 45 days before the first dismissal. Failure to consult would result in protective awards of up to 90 days’ pay for each employee and provides grounds for each employee to make a claim for unfair dismissal. Failure to notify the secretary of state is a criminal offence for which directors of P&O can be criminally liable.

Further, If the company had complied with UK rules on consultation and then faced strikes, it would be against the law to employ agency workers to cover for striking employees. The company’s decision, therefore, was clearly an informed one – prioritising profits over the welfare of many of its long-serving workers.

Did P&O Ferries break the law?

The Employment Rights Act theoretically only applies to British-registered ships that belong to a GP port. Many commentators believe P&O has registered its ferries offshore so that they do not have to abide by UK employment laws. P&O’s ship, The Pride of Hull, for example, is registered in the Bahamas, and The Pride of Kent switched from the UK to Cyprus in 2019.

P&O chief executive, Peter Hebblethwaite, referred to this in his letter to the BEIS: “The very clear statutory obligation in the particular circumstances that applied was for each company to notify the competent authority of the state where the vessel is registered… All relevant vessels are registered outside the UK. Notification was made to the relevant authorities on 17 March.”

Although it remains to be seen whether P&O Ferries have avoided a tidal wave of UK tribunal claims, as these provisions might not apply if employees could show they were working in Great Britain at the time of their dismissal.

On 24th March, two House of Commons Committees – on transport and business, energy and industrial strategy – held an evidence session to examine the options available to the workers who have lost their jobs.

TUC general secretary, Frances O’Grady, has called on MPs “do the right thing” by suspending all of P&O’s licenses immediately, adding that the P&O scandal had shown the “glaring weakness” in employment rights in the UK.

“We need to make sure this is never allowed to happen again,” she said. “It’s time for the government to finally deliver its long-awaited employment bill to strengthen workplace protections and impose strong penalties on employers who break the law.”