Conflicting views on legality of P&O sackings

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Claims and counter-claims surrounding the legality of P&O Ferries’ sacking of nearly 800 sea staff last Thursday continue to circulate, in particular concerning the company’s failure to notify the appropriate authorities in advance.

A senior Government official suggested that the UK authorities should have been forewarned of the mass redundancies but this suggestion has been refuted by the CEO of the DP World-owned company, Peter Hebbelthwaite.

He wrote to the UK Business Secretary pointing out that the 786 staff were in fact employed by three Jersey-based arms of P&O Ferries, adding: “The very clear statutory obligation in the particular circumstances that applied was for each company to notify the competent authority of the state where the vessel is registered. All relevant vessels are registered outside the UK. Notification was made to the relevant authorities on March 17.”

P&O Ferries has also pointed out in a statement that the redundant staff will be offered £36.5m in total – with around 40 getting more than £100,000 each and no-one receiving less than £15,000.

David Ashmore, Employment Law Partner at global law firm Reed Smith, comments: “There has been a lot of comment and confusion about how the law works in this area. The bottom line is that provided an employer complies with any applicable UK government notification requirement, realistically there would be no criminal liability,
“However, there are punitive financial sanctions for noncompliance with the requirement to notify Trade Unions and consult,” he continues. “For UK-based staff, it is hard to see how there would be any defence to this if there has been no prior warning at all of the dismissals. In that scenario, realistically the employer would be hit with the full penalty of 90 days’ pay per employee (25% of the annual wage bill).

“For employees based outside the UK, whether they are protected depends on the degree of connection to the UK. For example, any employee with a UK base would normally be protected by UK law.

“I understand from press reports that P&O are offering enhanced severance from a £36.5m redundancy pot, with a number receiving over £100k. The question now is whether the unions/employees will be pushing for a figure that reflects their full rights (e.g. unfair dismissal + notice + punitive award for noncompliance).

“In certain situations, it may cost less for an organisation to pay the penalty costs than to comply with the legal requirements, but recent events have shown that the reputational damage can be very high.”