P&O's decision to dismiss 800 people through a three-minute pre-recorded message not only betrayed a lack of compassion but, at first glance, appears to ride roughshod over the protections afforded to UK employees at risk of redundancy.
P&O seems to be pinning its hopes upon legislative exemptions that apply to mariners. But what happens to the eggs if that basket breaks? The ramifications could be expensive and further damage the company's reputation.
What should it have done?
P&O ought to have looked at how many employees it might make redundant 'at any one establishment'. An establishment is likely the port at which the crew was based. For each port, it should have considered how many people it proposed to dismiss. If that was 20 to 99 employees, then it was obliged to consult employee representatives for at least 30 days before the first redundancy took effect. For 100 or more employees, that period would be 45 days. P&O gave less than one hour's notice. This disregard for the process may attract punitive damages.
P&O should have lodged Form HR1 with the Secretary of State advising her of the number of proposed redundancies. Failing to do so is a criminal offence. That enables the Government to become involved to explore whether it can do anything to change the situation or to help those being made redundant.
The consultation period should have been used to inform and consult employee representatives about the proposed redundancies and the reasons for them. If the redundancies could not be avoided, reduced or their effect minimised, then the company should have consulted to agree the process.
Aside from legal and PR costs, failing to consult can lead to an award of up to 90 days' pay for each affected employee, and any such claim could be made collectively by the employee representatives. This would be in addition to any awards an employment tribunal might make to individual employees for unfair dismissal. Each employee could, in theory, be compensated for their losses by a maximum amount of up to one year's gross pay.
P&O has reportedly indicated that it will pay generous settlement sums to staff members, and will provide outplacement support and counselling, but staff members must enter into settlement agreements within two weeks. It has been reported that many have accepted. Settlement sums will need to cover notice pay, redundancy pay, and compensation for other claims, including unfair dismissal.
However, whilst a settlement agreement can be used to settle the potential claims for unfair and wrongful dismissal, and for statutory or contractual redundancy pay it cannot be used to settle a claim for breach of the statutory collective consultation obligations, and neither can P&O contract out of its potential criminal liability here.
The timing of the dismissals may be particularly cynical, given that new increased compensation limits are due to come into effect on 6th April.
Despite P&O's argument that the employees' contracts are not governed by UK law, it is offering settlement agreements, which are a UK statutory construct. This suggests that it believes that the employment of its seafaring staff is subject to the jurisdiction of the employment tribunals.