P & O dismissals raise a host of difficult issues
The sudden dismissal of nearly 800 staff by P&O, apparently in order to replace them with cheaper agency staff, has re-ignited concerns about the way mass redundancies are handled in the UK, writes David Mills, Partner with Mills & Reeve LLP.
At the time of writing, we don’t know how matters will end, but it is not too early to take some important lessons from the affair.
The first is that large-scale redundancies in the UK are often intertwined with the wider global economy. In this case a number of different jurisdictions are likely to be in play.
While UK-based workers are likely to be protected by domestic law, the law of countries where the vessels are flagged (Cyprus, the Bahamas and Bermuda) also needs to be considered as well as the law of the contracts under which the dismissed workers are engaged (apparently Jersey in this case).
There are also specific provisions that apply to mariners on vessels plying between UK ports and other European destinations which differ from those applying to shore-based workers.
The second, and perhaps most obvious, lesson is that P&O’s admitted failure to engage with UK employment law has significant legal consequences.
Unless the UK-based workers end up being reinstated, it seems likely that their employer will be liable for a payment in lieu of notice, a redundancy payment and a protective award for failure to consult with union or workforce representatives. Unfair dismissal claims are also possible on top.
Were this a purely domestic case, the directors could also face prosecution for failure to notify proposed redundancies to the Secretary of State. However, it seems that in this case it is the relevant authorities in the countries where the vessels are flagged that are entitled to receive these notifications.
Finally, there is the reputational damage caused by the manner of the dismissals to consider. It is possible the management underestimated the public fury that their actions have generated.
It is not clear whether the Government will have much leverage in these circumstances given that, unlike in some other European jurisdictions, the courts generally have no power to declare dismissals in breach of consultation requirements a nullity.
However, public disquiet over the aggressive use of fire and re-hire tactics is likely to lead to some tightening of the law.
Employment law in the UK has always recognised the freedom of employers to dismiss on contractual notice (or a payment in lieu of notice, where the contract permits this).
There are no signs that this will change. But the Government has recently announced that it will introduce a statutory code of practice on fire and rehire, and that compensation in ‘relevant cases’ will be uplifted by up to 25 per cent where the employer ‘unreasonably’ fails to comply.
The Government has also said that it plans to close what it now sees as a loophole in the law which allows ferry operators sailing to UK ports on foreign-flagged vessels to pay their mariners less than the National Minimum Wage.
• You can email David Mills for more information on this and other matters: david.mills [at] mills-reeve.com