Leading UK shipping company P&O Ferries sparked widespread outcry after sacking the entirety of its 800-strong crew on 17 March 2022. Head of Employment Joseph Lappin has reacted to each step of this story and spoken to Times Radio, Mail Online and City AM about the fast-evolving developments.
The announcement to workers was made via a pre-recorded Zoom meeting, stating that ferries will be primarily crewed by third-party staff in future and that current crew members’ employment was being terminated with immediate effect. Unions opposed the move and have threatened to bring legal action.
Immediate reaction
Reacting immediately after the announcement by P&O, Joseph spoke to the Mail Online about the company’s actions on face value: “It remains to be seen whether P&O can justify the dismissals. Why now and why so suddenly?”
“Based on the limited information available to us, it looks like the dismissals will be both substantively and procedurally unfair, giving rise to claims of unfair dismissal.
“If P&O Ferries can demonstrate that the sudden dismissals are necessary and crucial to the survival of the business, perhaps to deal with the pressures imposed on the company by Brexit, rising energy costs and the pandemic, an Employment Tribunal might find that P&O Ferries’ conduct was reasonable.” However, Joseph thinks that is unlikely and P&O would be on the hook for unfair dismissal and a failure to collectively consult with the RMT should any crew members and the unions pursue their claims in the Tribunal.
Joseph’s comments were shared by other media including The Independent and Yahoo! News.
Was this legal?
Joe appeared on the Times Radio Breakfast show with Jenny Kleeman and Chloe Tilly on 19 March to discuss whether or not P&O’s action was legal, and the likelihood of litigation ensuing.
Joseph began the interview by stating that P&O’s action is unlikely to be lawful.
The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) states that when an employer proposes to make large-scale redundancies within a period of 90 days, the employer is under a duty to collectively consult. When there is a recognised trade union, as there is in this case – the National Union of Rail, Maritime and Transport Workers (RMT), the employer must consult on its proposal with the trade union and should also notify the Dept. for Business, Energy and Industrial Strategy of its plans. P&O Ferries did not follow these steps prior to announcing the dismissals.
Addressing the issue of agency staff replacing P&O’s employees, Joseph noted that he struggled to see how all roles were obviously redundant when P&O has confirmed its intention to immediately replace workers with agency staff.
In a letter to P&O CEO Peter Hebbelthwaite, UK business secretary Kwasi Kwarteng said that the “failure to meet the notification obligation is a criminal offence and can lead to an unlimited fine.” Joseph noted that criminal charges can be brought against the company’s directors as well as the company itself. Cases of this type are becoming increasingly common, but the majority of employers do comply with the law.
Reports that agency staff replacing P&O’s crew may be paid just £2.60 per hour has also sparked controversy. Joseph said that because these workers are classified as ‘seafarers’ on non-UK flagged ships, they may not have the same rights as land-based employees, including the right to the national minimum wage. Joseph said most people would agree that P&O’s decision to pay such low wages would be unreasonable. In the last few days P&O has confirmed it does not propose to pay agency staff at least the national minimum wage.
Severance terms
Joseph provided these conclusions on P&O’s offering of severance packages for employees who had been dismissed:
“P&O say they have offered the 800 crew members “enhanced” severance packages which might ‘buy out’ the crew members’ unfair dismissal and related employment claims, including protective awards for the failure to collectively consult with the union. However, P&O may find not all staff will agree to the proposed severance terms. The PR fall out has already been devastating for P&O and the unions will want to make the most of the public support for their members in any ongoing negotiations with P&O. Some staff might hope that P&O reverses its decision and others may prefer to litigate on a point of principle despite any costs consequences. The maximum award for unfair dismissal is the lower of a year’s pay and circa £90,000.
“It is arguable that the decision to dismiss 800 crew members is not only unfair but also potentially discriminatory on grounds of national origin if staff are being replaced by cheaper agency workers from outside of the UK. P&O appears to have confirmed that “third party” staff from abroad will take on the roles formerly performed by the mainly British crew members.”
Question of jurisdiction
In response to the heavy criticism levelled at P&O, Peter Hebblethwaite initially publicly argued that the company has not broken UK laws because its ships are registered in Cyprus and Bermuda. Responding to this in City AM, Joseph noted that P&O still has duties to follow because its employees are based in the UK.
He expanded on this: “P&O say that there was no requirement to notify the Secretary of State for Business, Energy and Industrial Strategy of the large-scale redundancies because the ships on which crew members were working were registered in the Bermuda, Cyprus and the Bahamas and because staff were employed by a company registered in Jersey.
“The leading case on the territorial jurisdiction in collective redundancy on the seas, fittingly named Seahorse, has established that if the ships and employees are based in the UK then the duty to collectively consult will bite. The P&O ships are docked at ports in Northern Ireland and the South of England. At the end of their shifts, the crew members return to their homes in Larne, Liverpool and Dover and are paid their salaries in Sterling. Therefore, both the ships and the employees appear to be sufficiently connected to the UK and the duty to collectively consult will apply. P&O may experience plenty more rough days at sea.”
Admission of lawbreaking
Addressing a House of Commons hearing on 24 March, Peter Hebblethwaite publicly admitted that P&O Ferries “chose not to” consult with unions prior to making its decision, and thereby knowingly broke the law. “It was our assessment that the change was of such magnitude that no union could accept our proposals”, Hebblethwaite told MPs.
Reacting to the latest development, Joseph said this: “The failure by P&O to collectively consult gives rise to an award of compensation of up to 90 days gross pay for each crew member. However, many will ask whether such a flagrant disregard for the law should carry more than a financial penalty. There will be calls for a change to the law so that unions and employees can ask the courts to automatically stop companies following in P&O’s footsteps.”
“Hebblewaithe has maintained P&O has not broken any laws by failing to notify the competent authorities of the relevant flag states (Bermuda, Cyprus and Bahamas) in good time before the dismissals (P&O apparently did so just one day before the dismissals). This is not right – the duty to notify the relevant authorities does apply. However, the government has not implemented any consequential amendment to the relevant provisions in TULRCA to extend the criminal offence of failing to notify the authorities in good time before the dismissals and so P&O may evade any punishment in the form of an unlimited fine”.
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