P&O Redundancies: Is it legal?

P&O Ferries has come under intense criticism following its announcement to more than 800 staff members that they were being made redundant with immediate effect. Employees were informed via video call, with no prior warning or consultation. They were further told that enhanced payments would be made to them by way of a settlement agreement, to compensate them for being made redundant without due process, if this was signed and returned before 31 March 2022. Whilst the ethics and morals of the situation are questionable, it’s important to consider whether the process followed was a breach of employment law. 

Before considering any redundancy action, businesses should first compile a robust business case which outlines why redundancies are needed and why certain roles are at risk. Once that is complete, employers should assess the process they must follow. When 20 or more people are being made redundant at a single establishment within a 90-day period, collective consultation rules will apply and an HR1 form must be sent to the Secretary of State for Business, Energy and Industrial Strategy (BEIS). This means that if 20-99 people are being made redundant, the consultation period should last for no less than 30 days and when 100+ people are being made redundant, the consultation period should last for at least 45 days.

Failure to follow collective consultation can lead to employees, regardless of their length of service, raising a claim to the employment tribunal for a protective award. If successful, employers can be made to pay up to 90 days’ pay per employee who was not fairly consulted prior to being made redundant. Such compensation would be in addition to any award for unfair dismissal, if this claim was raised at the same time.

It can be assumed that P&O factored in the cost of the protective award, statutory redundancy pay and any payments contained within a collective bargaining agreement as part of their offer under the settlement agreement. However, if employees don’t sign the settlement agreement (meaning they opt out of their rights to raise a tribunal claim), P&O may find itself in a very difficult situation.

Since P&O plan to replace existing staff with agency workers, it is likely the redundancy will be unfair, as there will still be work available for the staff to do. This poses the next question of what the organisation can do, to ensure they are still complying with relevant employment legislation. It is possible they may consider completing a (widely criticised) fire-rehire process, to allow employees to continue their employment but on less favourable terms. The Labour Party enforced an emergency vote in Parliament on Monday (21 March) to ban the use of such practices, in an attempt to strengthen workers’ rights; we await its outcome.

However, it is also possible that P&O will exploit a loophole; those with seafarer status may not be eligible for protection under UK employment law. Instead, jurisdiction could fall under another country’s labour laws, meaning their employment rights, including those afforded in redundancy and change to terms and conditions situations, will vary significantly. A number of factors must be reviewed when determining applicable jurisdiction which both P&O, their staff and others involved, will need to carefully assess.  

Even if P&O avoid claims through the employment tribunal system, this does not mean they are on dry land; there are still further risks of industrial action from trade unions and civil penalties from the government, as well as significant reputational damage.

 

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