I think most employment lawyers would have had the same reaction as me when they saw the news about P&O sacking 800 ferry workers without notice or consultation. First you see it as an outrageous breach of even the basic requirements of employment law. Then you think ‘Oh hang on, isn’t there something in the legislation excluding people who work on ships? Is it next to that bit about share fishermen?”
As it turns out I think that the ferry workers are going to be covered by UK employment law. The exclusion of mariners applies only to British registered ships where the employees do not have a close connection with the UK. If crew members essentially work out of Dover or Hull I think it is pretty clear that UK employment rights apply to them. There might be more room for them to argue that the duty to inform the Secretary of State of the redundancies does not apply if the employees’ work on ships registered to other countries, but that is a matter between P&O and the Government – it doesn’t affect the position of the employees who have lost their jobs.
The truth is that P&O has chosen not to even try to comply with UK employment law. Mass dismissals for redundancy without notice or consultation will mean that individuals with more than two years’ service will have been unfairly dismissed. There will also have been a breach of the obligation in S.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 to consult with employee representatives at least 45 days in advance of any dismissals taking effect. Of course in some cases an employer can argue that the urgency of its position means that such consultation cannot take place and that the dismissals are fair. But there is no serious suggestion of that being the case here. The fact that P&O had begun lining up replacement crew before announcing the redundancies is basically enough on its own to scotch that defence.
P&O know this. They knew when they took the decision to behave in this way that they would have to pay out compensation to employees. Clearly they have decided that the amount they save as a result of this exercise will outweigh by some margin the amount of compensation they will have to pay. I am sure that settlement agreements will already be in the pipeline.
A lot of the commentary I have seen is that this case emphasises the need to ‘ban’ the practice of fire and rehire – a much more catchy phrase than “dismissal and reengagement” which is what I was brought up calling it. In particular many have referred to the private members Bill proposed by MP Barry Gardiner – the Employment and Trade union Rights (Dismissal and Reengagement) Bill. This shared the fate of almost all private members bills in that it was “talked out” in Parliament and failed to get a second reading in the Commons.
But that Bill would not really have changed the calculus for P&O in this case. Remember that what P&O did was already illegal under out current law – and they did it anyway. Barry Gardiner’s Bill was focussed on employers seeking a variation of contract backed up by the threat of dismissal. P&O missed that stage out and went straight to the dismissal itself. They aren’t even, as I understand it, offering reengagement.
The P&O situation highlights a feature of UK employment law that is often under appreciated, but is striking for many who come to the UK from some other jurisdictions. UK employment law seeks to punish employers who act in breach of it – but does not stop them from doing so. If an employer makes the calculation that the financial consequences of ignoring the law are outweighed by the business benefits of doing so then it is free to go ahead.
Sometimes of course an employee can get an injunction preventing the employer from acting in breach of a contract of employment. We sometimes see cases from NHS consultants who are enforcing particularly tightly drafted disciplinary or conduct procedures, but this is not really an option available to ‘normal’ employees. More recently we have seen an injunction obtained by the Trade Union USDAW preventing Tesco from dismissing a number of employees and offering them new contracts on less favourable terms. I can’t stress enough however how unusual the facts of that case were. In a previous deal Tesco had awarded those workers an additional payment as an incentive to agree to a restructuring programme and had given them assurances that this would be a permanent entitlement – a benefit ‘for life’. When Tesco sought to terminate the contracts of those workers and offer them new contracts without that payment, the High Court granted an injunction preventing the dismissals. Tesco’s guarantee that the payments would be ‘for life’ created an implied term that the contracts would not be terminated in order to get around that obligation. I don’t think we can really use the USDAW case as a spring board for injunctions preventing employees from being dismissed in breach of their statutory rights.
The problem of employers calculating that they can afford to disregard employment protections is not a new one and is not confined to the UK. In 1997 the closure of a Renault factory in Belgium caused major controversy. It was announced by the French Chief Executive in a press conference at the same time as the Works Council were informed – making it clear that there was no room for negotiation. The fact that there was no mechanism for preventing the closure led to a proposed EU directive on informing and consulting employees which had at its heart a provision which rendered business decisions null and void if they were implemented in breach of the obligation to consult. This met fierce resistance from the employer’s lobby (I’m speaking from memory here, as I was part of that lobby at the time). A blocking minority was marshalled against the directive – led by the UK under a labour government. Deadlock was only broken when the provisions on remedy were dropped. As a result we now have the Information and Consultation of Employees Directive 2002 which only requires ‘adequate sanctions’. That is implemented in the UK by the Information and Consultation of Employees Regulations 2004 which are so weak that they are largely ignored. They don’t even attempt to implement the basic requirements of the Directive and it was always a puzzle to me that they were never legally challenged. I’m sure the trade union movement had its reasons.
Anyway, the result is that UK employment law concentrates on providing some compensation to employees whose rights have been ignored, rather than ensuring that employers comply with the law in the first place. The only real way of preventing employers from occasionally choosing to ‘do a P&O’ is either to provide punitive remedies that are linked to the amount the employer hopes to save by the exercise, or to require major job losses to be cleared in advance by, for example, the Central Arbitration Committee – with any dismissals being deemed to be ineffective until that clearance is given. The current Government is obviously going to do nothing in that direction.
In the meantime, the best we can do is bear in mind, when making our travel arrangements, that other ferry services are available. Maybe we can show that P&O’s calculations were flawed after all.