With the shockwaves still reverberating around the ferry company, we look at the P&O redundancy fiasco and provide a timely reminder of the fair rather than unfair way to manage staff through such a difficult process. 

I’m sure we were all shocked by recent news featuring the devastating move by the owners of P&O Ferries, DP World, to remove 800 members of staff in a single unexpected announcement. The three-minute video call was brutal in its delivery and came without warning, leaving staff stunned and distressed

Staff Experience

Having logged on and watched the short pre-recorded video message, many employees in the firing line immediately contacted their unions who were equally in the dark over the decision.  Other staff, who were still onboard docked P&O vessels, witnessed the arrival of unknown, balaclava wearing security personnel some brandishing cuffs and tasers protected by body armour.  They too were given a talk along the same lines as the video.

Management Response

P&O CEO, Peter Hebblethwaite was summoned to face a committee of MP’s to account for his company’s actions however his frank responses shocked the meeting attendees leading to calls for him to resign.  At the time of writing this the employer DP World is standing by their CEO.

Mr Hebblethwaite suggested that having weighed up the options for his business and the financial difficulties, losing £100m in the last 12 months, he decided to press ahead with the immediate announcement.  His rationale for taking such drastic action, counter to UK employment law, was based on his assessment of union responses which would significantly delay their plans to bring in cheaper, internationally sourced freelance workers.  The plan is to reduce the wage bill by half and in his words put it on a par with industry pay scales.

The average hourly rate offered to the international crew is £5.50 an hour, the minimum wage for employees aged 23 and over (as of April 2022) is £9.50 an hour.

Interestingly P&O’s CEO stated if faced with the scenario again and considering the outcome of the actions he would STILL take the same decisions.

The offer to staff as a minimum transpired to be £15k with a small number receiving around £100k.

One of the additional purported “defences’ for P&O is founded in their adherence to Maritime Law as opposed to the rules and regulations of any single nation.  It suggests that there is a loophole which P&O sought to make use of.

Unions

Union representatives were quick to point out the breach of UK employment law and the failure to undertake a collective consultation which is mandatory for any round of redundancy affecting 20 or more staff. Such a move by the employer made all the redundancy notices immediately unfair regardless of the money on offer.

Government

The Government has expressed its concerns and made it clear that they believe the law has been broken. Both the Prime Minister, Boris Johnson and Transport Secretary Grant Shapps have called for the CEO to resign.

The process

Employers must consult with staff before deciding on redundancy measures.

Failure to consult effectively with employees before making any redundancies will leave the employer open to claims for unfair dismissal.

If the discussions involve 20 or more staff you will need to organise “Collective Consultations” this is where staff representatives, such as unions, can participate in discussions.

During consultations it is advisable to find agreement on issues such the selection process and measures you will apply to determine the selection of employees for redundancy.

The consultation is an opportunity to cover:

  • Communication of forthcoming plans and background to the decisions
  • Exploring any possible route to reduce the number of redundancies
  • Set out how you will decide on those selected for redundancy
  • The selection criteria could raise a discussion around the attributes you will need from staff as you move forward.
  • It’s obviously an anxious time for staff so allow time for plenty of questions and if possible publish an accessible FAQ covering the common points of concern
  • Being a considerate employer what steps have you put in place to support those made redundant, assistance with finding a new role, CV drafting, re-training options etc..

The above is how it’s supposed to work but all too often employers look for a short cut, fortunately not always as aggressive as the P&O approach but all too easily avoided by planning the process out and taking your employees with you as you explain what’s happening.

Given what CEO, Hebblethwaite considered was a generous compensation package its surprising that they didn’t at least try and open a dialogue with staff. As tough as such a process can be, in the long term it’s almost always worth the short-term pain of difficult conversations to arrive at more sensible resolution and maintain a respectful relationship with those employees who’ve offered loyal and productive service.

Literally paying off workers can leave them shocked, traumatised, helpless, and feeling a lack of worth. It immediately reduces confidence at a time when they’ll need all they can get to secure a new job.  A lump sum may be all well and good but right now those with financial commitments, mortgages, energy bills and increasing grocery costs to cover would very likely prefer the opportunity of longer-term security.

P&O’s move is effectively the seafaring equivalent of a bank outsourcing customer support services to Asia. Economically there may be logic in reducing a wage bill through seeking staff who are prepared to take a much lower wage however the difficulty here is that the company managing the resourcing of these staff will be doing so to supply crew who will work from UK ports.

Whilst maritime law may technically provide for a move like this, P&O may find themselves tripping up in this loophole and navigating troubled waters for some time to come.

If you have any concerns about the redundancy process, find that it may be necessary in your business but would prefer professional guidance please drop me a line Kathryn Hirst, Partner and Head of Employment Law at Hansells Solicitors.

Kathryn Hirst | Partner Commercial, Employment

01603 751 932

 kathrynhirst@hansells.co.uk

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