P&O Ferries announces cancellation of services along with 800 redundancies

Yesterday, P&O Ferries announced that it had made 800 members of its staff redundant, effective immediately, and cancelled its services for the next few days.

The British shipping giant said the business is “not viable” in its current state: in a statement from the company, they claimed they were making a “£100m loss year-on-year” and said their survival is “dependent on making swift and significant changes now”. The ferry operator went on to say: “Without these changes, there is no future for P&O Ferries.”

The company said the staff being made redundant will be served with “enhanced” severance packages. However, the move has been widely criticised, with heavy criticism coming from Labour MP Diana Johnson and RMT National Secretary Darren Proctor.

Following the announcement, Labour MP Diana Johnson said people in balaclavas had been seen “taking British crew” off of the ships. She also said the staff who have been made redundant were being replaced by agency staff in buses on the quayside.

RMT national secretary Darren Procter said the move by P&O Ferries “puts a knife right through the heart of UK maritime”.

Is the move legal?

According to Dr Johnathan Lord, HR expert at the University of Salford, there is the potential for legal ramifications after P&O Ferries’ recent move.

He comments: “Can P&O lawfully force staff to be made redundant in this way? Employment Law states that you are part of a ‘collective redundancy’ if your employer is making more than 100 redundancies in one location, in which case they must consult for at least 45 days.

“Employers must also hold ‘group consultations’ if there is a collective redundancy, and support staff in finding alternative employment or proceed through a fair selection process for those at risk of redundancy.

“Therefore, P&O would be expected to undergo this process before making any mass dismissals, and based on media as well as social media reports on the 17th March, it’s not evident whether this has happened. P&O staff could bring a claim of unfair dismissal in the employment tribunals if this process is not followed, with the maximum compensation being the lower of £89,493 or 12 months’ gross pay. If they were not paid their notice or a statutory redundancy payment, claims could also be brought for these.

“This could be extremely costly for P&O, but in the long-term could it be economically beneficial? The term ‘fire and rehire’ is a controversial method used by numerous businesses, such as Weetabix, Tesco, British Airways, Heathrow and British Gas, and involves sacking staff and then allowing them to apply for their old jobs on less favourable terms usually.

“Trade unions and many legal experts support a ban on the practice, but ministers last year blocked a bill to do this, even though 9% of workers were affected by such a scheme in the first year of the Covid-19 pandemic. P&O is in the early stages of the process, but rather than a straightforward fire and rehire, they could replace staff with agency workers and allow those made redundant to join the agencies.

“This may assist P&O financially but reputationally this could have serious consequences. There are almost certainly going to be legal challenges by the unions around this process as well as mass tribunal claims, but the biggest damage for P&O could be reputational, with questions around their morality in dealing with staff being raised. The RMT union has stated that the situation was “turning into one of the most shameful acts in the history of British industrial relations” and also one which could overshadow the 185-year history of P&O.”

P&O set to pay laid-off staff?

According to Alex Mellis, Employment Barrister at No5 Barristers’ Chambers, P&O faces paying a year’s salary to all 800 workers who were made redundant.

He comments: “This unexpected decision puts the livelihoods of over 800 people into doubt during a period where living costs are increasing dramatically. There will no doubt be legal implications for P&O. By all accounts, there seems to be no doubt that there has been a failure to consult the workers affected by this decision and this will likely lead to various avenues of legal proceedings.

“In the short-term, we may well see the trade unions seek an injunction in the High Court, although we would expect to see it imminently if it were to happen at all and it is likely to enter a relatively untested area of law. This would essentially force P&O to carry out the consultation with workers that should have happened.

“There is also a mechanism for the failure to provide consultation which can be sought by the trade unions in a complaint to the Employment Tribunal. If the Tribunal agrees the consultation was not carried out, a protective award can be ordered. This would come in the form of a week’s pay for a period of 90 days, dependent on the severity and egregiousness of the breach by the employer, so we could see P&O needing to pay out up to 90 days’ additional pay for all 800 employees.

“There are also grounds for these workers to individually claim for unfair dismissal. In a simple unfair dismissal case, the pay-out will be capped at a year’s salary for every employee who takes this step, which may well be a similar amount to the recently announced ‘enhanced’ redundancy packages that have been discussed. Whether made redundant or dismissed without notice, P&O will be expected to pay out a year’s salary to these workers as standard, with some able to claim more should there be further discrimination involved in the dismissal.

“For whichever avenue of legal proceedings take place, it is set to be a hefty price tag for P&O, although one they may well have calculated and decided to take already.”