The P&O dismissals – our views

Employment law has been in the headlines again recently with the dismissal of 800 of P&O’s UK staff via an online group meeting. There was no consultation with unions or staff before their dismissal, nor was there any notice given. The law requires a minimum 45 days’ consultation with unions or employee representatives where there are 100 or more redundancies proposed at one establishment within 90 days.

Understandably, this has left a lot of people with questions about how the law can be so blatantly ignored in this way. We know from the evidence given by P&O’s Chief Executive, Peter Hebblethwaite, to the House of Commons Business, Energy & Industrial Strategy Committee that the company knew it was required by law to consult with unions but chose not to do so. Apparently they have offered settlement packages to the affected staff which are intended to compensate them for their potential claims.

We have read a lot of commentary on the subject and in doing so, it has become clear that many people did not realise until now that (in most cases) employment law in the UK doesn’t give any power to stop employers from dismissing people in breach of the law, or to force their reinstatement. Instead, the law mainly focuses on providing a mechanism for compensating employees who are affected by an employer’s breaches. From what we know of the situation so far, it sounds as if P&O assessed what the potential exposure in terms of compensation would be, and decided that it would be better for them from a business point of view to breach the law and pay the compensation than it would be to go through the legally required processes.

It appears that the main claims are as follows:

• Claims for notice pay (either the period set out in the contract, or the statutory minimum of 1 week for every year of service up to a maximum of 12, whichever is the greater)
• Claims for holiday pay for holiday accrued but not taken up to the termination date
• Claims for unfair dismissal (compensation for which is made up of a basic award, which is equivalent to a statutory redundancy payment, and a compensatory award which is normally capped at one year’s gross pay)
• Claims for a protective award (this is up to 90 days’ gross pay per employee and is designed to compensate for the employer’s failure to go through the collective consultation process. Here as the breach was so flagrant it seems highly likely that the maximum award would be made).

Some other points which could be relevant here are:

• P&O have apparently replaced the British staff with non-British agency workers (on much lower pay). If that is the case, there may be an argument that the employees’ dismissals are linked to their nationality which would give them potential discrimination claims with uncapped compensation.
• The transfer of the work to the agency might also amount to a TUPE transfer, and if so there would be potential claims for failure to inform and consult under TUPE as well as regarding the redundancies.
• As well as the requirement to inform and consult about collective redundancies, there is also a legal requirement to submit form HR1 to the Insolvency Service. Failure to do this is a criminal offence. P&O did not do this, and therefore there is potential for an unlimited fine. However, some commentators have said that it is arguable that P&O was not caught by this requirement because of some complexities regarding maritime law. It will be interesting to see whether anything comes of this.

Despite P&O factoring in the costs of the dismissals and potential claims, it doesn’t seem that they anticipated the strength of feeling and the amount of reputational damage that has resulted from their actions. We would not be surprised if changes to the law are introduced to try to prevent similar situations from arising in future.