‘On every level it has been mishandled’: P&O Ferries faces reputational hit over sacking scandal

P&O Fer­ries’ deci­sion to sack 800 staff via video call on Thurs­day (17 March) has been described by trade unions as a “shock­ing” way to treat work­ers. 

The com­pa­ny claims the mass sack­ing was nec­es­sary to cut costs and keep the busi­ness viable. It plans to replace the dis­missed employ­ees with cheap­er agency work­ers, some of which the Nation­al Union of Rail, Mar­itime and Trans­port Work­ers (RMT) alleges are being paid $2.38 (£1.80) an hour.

Although this fig­ure is well below min­i­mum wage for British work­ers, it is pos­si­ble that its ships are reg­is­tered in coun­tries out­side the UK. This would mean that UK leg­is­la­tion may not apply to any such migrant work­ers engaged from oth­er coun­tries, accord­ing to Winck­worth Sher­wood employ­ment lawyer Andrea Lon­don. 

RMT gen­er­al sec­re­tary Mick Lynch describes the move as a “gut-wrench­ing betray­al” of its staff, claim­ing that “the rule of law and accept­able norms of decent employ­ment and behav­iour have com­plete­ly bro­ken down”.

The gov­ern­ment is review­ing its con­tracts with the firm and has request­ed that its Insol­ven­cy Ser­vice inves­ti­gates whether the British fer­ry oper­a­tor, which was acquired by Dubai-based DP World in 2019, breached employ­ment law dur­ing the han­dling of the redun­dan­cies.  

Did P&O Ferries break employment law?

Cur­rent employ­ment law requires that any organ­i­sa­tion which plans to make 20 or more peo­ple redun­dant with­in a 90-day peri­od hold con­sul­ta­tions with a recog­nised trade union or elect­ed employ­ee rep­re­sen­ta­tive first. Con­sul­ta­tion must start at least 45 days before the first dis­missal if 100 or more redun­dan­cies are tak­ing place, while the com­pa­ny must also noti­fy the UK’s busi­ness sec­re­tary — in this case Kwasi Kwarteng.

In a let­ter to P&O Fer­ries CEO Peter Heb­bleth­waite, Kwarteng expressed the UK Government’s “anger and dis­ap­point­ment” at the way the com­pa­ny han­dled the redun­dan­cies and warned that it could face an unlim­it­ed fine if employ­ee con­sul­ta­tions were found not to have tak­en place.  

Adam Pen­ning­ton, an employ­ment law spe­cial­ist at Stephen­sons Solic­i­tors, says the appar­ent fail­ure of P&O Fer­ries to com­ply with its legal oblig­a­tion to con­sult with mem­bers of staff before mak­ing them redun­dant is “con­cern­ing”.  

He adds: “A fail­ure to inform and con­sult with mem­bers of staff at risk of redun­dan­cy can give rise to a num­ber of claims includ­ing unfair dis­missal and claims for a ‘pro­tec­tive award’ for fail­ing to com­ply with the min­i­mum con­sul­ta­tion peri­ods.”

Slater and Gor­don’s head of employ­ment law Jo Mack­ie agrees that any fail­ure to hold col­lec­tive con­sul­ta­tion would be unlaw­ful. She says: “In the UK, your rights on redun­dan­cy are pro­tect­ed as an employ­ee. You can’t get around not fol­low­ing the prop­er redun­dan­cy process.”

Should there be changes to employment law?

The Trades Union Con­gress is call­ing for the treat­ment of P&O Fer­ries’ staff to be “a cat­a­lyst for change on work­ers’ rights”. It believes gov­ern­ment must “urgent­ly bring for­ward an employ­ment bill to stop work­ers from being treat­ed like dis­pos­able labour”.

The pub­lic are broad­ly in agree­ment, with a YouGov poll find­ing that 83% of British adults believe it should be ille­gal for com­pa­nies to be able to make large sec­tions of their work­force redun­dant and imme­di­ate­ly replace them with out­sourced low­er-paid work­ers doing the same jobs. But Lon­don believes that any sub­se­quent changes to employ­ment law in the UK would be unnec­es­sary.

“Our employ­ment laws are gen­er­al­ly con­sid­ered to be fair­ly com­pre­hen­sive, although it is well known that oth­er Euro­pean coun­tries – par­tic­u­lar­ly France and Spain – have sub­stan­tial­ly more employ­ee-pro­tec­tive leg­is­la­tion,” she says. “It is not the fit­ness of the law here which is in issue, but the fact that P&O Fer­ries has deter­mined to entire­ly dis­re­gard it.”

If P&O Fer­ries is found not to have fol­lowed a prop­er redun­dan­cy process, then it is up to the trade unions and their mem­bers to decide what to do next. Although Mack­ie hasn’t seen the details, she adds: “If the alle­ga­tions are true, you could choose to bring an employ­ment tri­bunal claim for breach of col­lec­tive con­sul­ta­tion rights or you could agree to a set­tle­ment and find a job else­where with an employ­er that might treat you bet­ter.”

If the case went to tri­bunal, the max­i­mum penal­ty could be con­sid­er­able. Lon­don says: “While the finan­cial amount of the employ­ees claims are lim­it­ed: unfair dis­missal being the less­er of up to 1 years’ salary or £89,493; and up to 90 days actu­al pay per employ­ee for fail­ure to col­lec­tive­ly con­sult, if you mul­ti­ply those indi­vid­ual claims by up to 800 times, the over­all com­pen­sa­tion award­ed will not be small.”  

Rus­tom Tata, the chair­man of law firm DMH Stal­lard, believes that, giv­en the employer’s approach, “it is like­ly that the employ­ees will find con­sid­er­able sym­pa­thy in an Employ­ment Tri­bunal” when any case is heard.

He adds: “One has to ques­tion the extent to which the integri­ty of the P&O Fer­ries brand will be impact­ed not only by the fact of redun­dan­cies, but also by the appar­ent­ly whol­ly planned approach being tak­en to such a large pro­por­tion of its work­force that ignores some of the basic fun­da­men­tals of employ­ee rela­tions.”

P&O Ferries could face reputational damage

Beyond the legal ram­i­fi­ca­tions, there will be a rep­u­ta­tion­al cost for the com­pa­ny, which now finds itself embroiled in an employ­ment scan­dal. Although Lime­light HR founder Sal­ly Bendt­son acknowl­edges that busi­ness­es have to make redun­dan­cies when they come under finan­cial pres­sure, she ques­tions the way work­ers have been treat­ed.

“If you’re hon­est and trans­par­ent, the per­son might not like the sit­u­a­tion they’ve been caught in, but they’ll under­stand it and will quite often remain sup­port­ive of the com­pa­ny,” she says. “When peo­ple aren’t giv­en the oppor­tu­ni­ty to be heard or to have their say, that’s when they’re left with feel­ings of anger and frus­tra­tion.”

Beyond the poor treat­ment of its staff, pas­sen­gers were also left strand­ed as the com­pa­ny can­celled all upcom­ing ser­vices and warned of “sig­nif­i­cant dis­rup­tion”. Speak­ing to Sky News, one cou­ple said they were “aban­doned” by P&O Fer­ries after their return trav­el from Ire­land was can­celled. 

This is reflect­ed in data from YouGov BrandIn­dex, which saw all mea­sures of P&O Fer­ries brand rep­u­ta­tion drop between 14 and 20 March. Its rec­om­mend­ed score – which deter­mines whether peo­ple would be more like­ly to rec­om­mend or tell a friend to avoid a brand – fell from 14.6 to ‑7.1, while its ‘buzz’ score also plunged by 24 points over the same peri­od, from 0.5 to ‑24.5. This met­ric, which mea­sures the bal­ance of pos­i­tive and neg­a­tive com­men­tary around a brand, sug­gests peo­ple are now more like­ly to have a neg­a­tive per­cep­tion of the brand.

The busi­ness sec­re­tary also point­ed to the fact that P&O Fer­ries was in receipt of “mil­lions of pounds” of tax­pay­er sup­port dur­ing the pan­dem­ic, through the fur­lough scheme. Bendt­son adds: “You can only assume that the busi­ness was putting finances first but, even if they have account­ed for the poten­tial cost of numer­ous claims, there will also be the rep­u­ta­tion­al risk, which will be a huge cost.”

Despite P&O Fer­ries’ hopes to halve its wage costs by fir­ing hun­dreds of employ­ees, the hid­den cost of the rep­u­ta­tion­al dam­age the episode has caused could con­tin­ue to rise. “On every lev­el it’s been mis­han­dled,” Bendt­son says.

P&O Fer­ries were con­tact­ed for com­ment but had not yet replied by the time of pub­li­ca­tion.