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The plight of the P&O employees publicly dismissed in a pre-recorded statement, with an army of allegedly lower paid agency workers waiting to take over from them, standing shoulder to shoulder with security guards employed to ensure a changing of the guard, has drawn condemnation from all sides of government. Beverley Sunderland, Managing Director at Crossland Employment Solicitors, offers some thoughts.

Don’t get me wrong, every day in business employers will choose to ignore the letter of the law – perhaps a capability process will be too disruptive and no-one believes it will make a difference, or the employee works in a business where disgruntled staff going through redundancy consultation is just too high a risk to take. But most employers would have considered all factors, including personal circumstances, mental health and put in place additional support before taking this step. They generally won’t do it lightly and it is the exception rather than the rule.

Historically the banking industry shed hundreds of jobs just before Christmas and there would be no warning, no consultation, but they would offer big packages for employees to leave quietly which would cover off notice, the 90 days award for failure to consult and a hefty ex-gratia payment to sweeten the deal.

But highly paid bankers just do not attract the same level of sympathy as those hard-working seafarers keeping us safe on board our ferries, and those of us with long memories remember what happens when it all goes wrong and disasters such as the Herald of Free Enterprise occur. It was also the cold, calculated and public way in which this all played out on our screens, with no consideration that these hard-working men and women must have got such a terrible shock, waking up believing they had a job and going home knowing they had been replaced with cheap labour. How could UK workers just be replaced by those who are allegedly not even being paid minimum wage - in the 21st century?

This is not ‘fire and rehire’

Let’s start by clearing up a few myths - this is NOT fire and rehire. Fire and rehire occurs when companies consult with their employees about changes to their terms and conditions, if the employees do not agree then the company serves contractual notice and at the same time offers them the new contract with the new terms. If the employee declines the new terms, then they are dismissed and can still bring a claim for unfair dismissal. It will be for the employer to show that this was fair and their rationale and process will be scrutinised. See Changing Terms and Conditions of Employment.

In the case of P&O there has been no consultation, the management have dismissed all employees with immediate effect, in a pre-recorded message, with armies of allegedly lower-paid agency workers standing by to take over, alongside security guards to escort the dismissed employees from their ships. There was no element of ‘rehire’ about this calculated move, it was simply ‘fire’ in very public and humiliating circumstances.

So, how is that P&O can apparently trample all over the rights of their employees without anyone seemingly being able to do anything about it and the government appearing a little ill-informed about the law?

Are these P&O employees subject to UK law?

P&O have suggested publicly that because their ships fly a foreign flag and their employees work at sea, then they are not subject to the same laws as ordinary UK land-based employees. Perhaps a slight play on words on their part because it is correct that some of the laws are different, for instance the obligation to file an HR1 form with the Insolvency Service for the termination of 20 or more employees does not apply. Instead since 2018 P&O are obliged to inform the countries where their ships are registered. However, most of our employment rights are likely to apply.

Even though the P&O ships may fly a foreign flag, if the employees are closely connected with the UK and start and finish their journeys here, then they are likely to be covered by UK employment law. Indeed, P&O themselves are offering all dismissed employees settlement agreements under UK employment law, so they must think they are bound by our laws, even if they are not prepared to say so publicly.

Their statement is also rather at odds with their own collective agreements with the unions. For instance, when P&O Irish Sea (Jersey) Ltd entered into their collective agreement with the union Nautilus International, the agreement very specifically says at clause 4 that they submit to the exclusive jurisdiction of the UK courts and employment tribunals and if for some reason the tribunal says it does not have jurisdiction because the company is Jersey based (jurisdiction being a matter of law and not agreement), then the case will be reviewed by an independent person chosen by agreement or an employment judge acting as an arbitrator and appointed by ACAS.

Enforcing their rights

The practical problem about a collective agreement of course is that it is an agreement between the unions and the company and the main way of enforcing it is through industrial action. If all your members have already been sacked, that becomes slightly problematical. A bigger issue for the government is that if P&O or indeed their parent company can willingly enter into a collective agreement promising all sorts of things, but then rip it up when it becomes inconvenient to them, are they really a trustworthy organisation with which to do business?

The practical consideration for the individual employees whose employment was terminated is this: any claim for unfair dismissal, failure to consult, notice, reinstatement and indeed persuading a tribunal to fine P&O up to £20,000 for totally ignoring their rights, will be heard in 18 months to two years’ time. At that point the employee will be awarded a protective award of up to 90 days full pay for failure to consult but will only be awarded compensation based on their losses and that will be capped at a years’ pay or (currently) £89,483 whichever is the lower. They are under a duty to mitigate their losses – in other words to go and get another job, and if they do (because they have bills, mortgage and rent to pay) they might find that they have no losses. So, if faced with an offer which is, in some circumstances allegedly up to 91 weeks’ full pay and includes 90 days for failure to consult and their notice, they might well sign up and promise not to bring a claim against P&O. Yes, they could ask for reinstatement but who on earth would want to go back and work for a company that treated them in this way?

Minimum wage

And then the tricky question of how P&O can allegedly pay agency workers at less than the minimum wage? Surely, the government’s fanfare in 2020 that UK seafarers would now be entitled to minimum wage would put a stop to that? You might think so but as ever the devil is in the detail. There is an exception for ships which exercise innocent passage and transit passage through our waters. And one of the specific examples given on the government’s website is: ‘ferry services operating between the UK and mainland Europe (including the Republic of Ireland)’. Why? While it might be easier to understand in relation to cruise ships which just happen to dock here – to exclude ferries based here in the UK from the minimum wage legislation is simply bizarre and despite lobbying by the unions, the government has not changed it (although it’s reportedly planning to do so).

What can be done?

So why did P&O not just sit down with the unions, explain the financial hole that they were in and discuss ways of avoiding this. Presumably because they made stereotypical assumptions that the unions would take everyone out on strike, paralyse the business and P&O would not be able to use agency workers in their place as that is against the law. Given that P&O fully consulted with unions about 600 job losses because of the pandemic, and the union comes with a wealth of knowledge, and that consultation is about finding ways to avoid redundancies, P&O’s archaic (maverick?) view of the unions seems a little in the dark ages. After all, if this is what the unions had done then the company would, based on their description of their financial position, have quickly called in the administrators and the unions would be left with 800 members out of work and receiving statutory redundancy.

There have been calls for ‘fire and rehire’ to be outlawed – not only does it not apply here but to do so would be a mistake. Companies need to have the ability to change terms in appropriate circumstances and to cut off this avenue will simply result in more redundancies. Their reasons and process are carefully scrutinised by the tribunals already.

The starting point is that the government needs to remove ferries from the innocent passage and transit passage exemptions so that the agency utilised by P&O is obliged to pay minimum wages to its staff. The next step is to introduce legislation which allows the Secretary of State to bring a case against employers who deliberately and flagrantly flout the employment laws of this country, irrespective of whether their employees sign settlement agreements. If failure to file an HR1 form can result in criminal prosecution of directors, then it is absurd that decision makers cannot be punished for much more serious breaches.

And finally, P&O need to talk to the unions in a meaningful way and tap into their years of experience and practical suggestions to try and find a solution - oh, and find a new Chief Executive who brings the right balance of commerciality and empathy to the negotiating table.