P&O redundancies: seafarer employees and the scope of UK law

Voice on… Employment law, by HR-inform, provider of CIPD’s employment law helpline 

The sacking of over 800 staff last week by P&O Ferries, a subsidiary of Dubai-based DP World, caused a public outcry in the UK, and prompted many questions about the legality of the process. The employees were made redundant with agency workers hired to do the work. The CIPD invited HR-inform to give its legal perspective on the case.  

P&O Ferries has found itself in the spotlight following its announcement to more than 800 staff members that they were being made redundant with immediate effect. Employees were informed of this via video, with seemingly no prior warning. They were further told that enhanced payments would be made to them by way of a settlement agreement, to compensate them for being made redundant without due process, if this was signed and returned before 31 March 2022. Whilst the ethics and morals of their actions have been questioned, P&O’s compliance with employment laws is also under scrutiny.   

Delving into an organisation’s mass HR processes is never straightforward, and P&O’s situation is complicated further by potential jurisdictional issues. The employees involved are classed by P&O as seafarers and, as such, P&O’s position is that they fall outside of the scope of UK employment laws. Despite this, the events have cast a light on an employer’s obligations when it comes to large redundancy procedures which are, importantly, greater than when dealing with a small scale exercise. 

Before considering any redundancy action, organisations should compile a robust business case which outlines key pieces of information, including why redundancies are proposed, which roles are at risk, any alternative processes that have been considered in order to avoid compulsory redundancies. It is this ‘rationale’ that will be a key feature in an organisation’s explanation to both its staff and, ultimately, an employment tribunal, on why this path is necessary.  

Employee consultation is the basis of a fair redundancy procedure; it’s the method of communication between the organisation and its affected employees on what’s happening. The way that consultation is carried out differs depending on the number of redundancies proposed. 

Where collective consultation is triggered this must be done with employee representatives, or trade unions where they are present. Where there are no appropriate representatives in an organisation, an election must be held to appoint some. Representatives have to be provided with information about the planned redundancies, including the reasons for the redundancies, the number of employees involved, how employees will be selected etc.   

Consultation must be meaningful; genuine consideration to employees’ suggestions must be given. Employees should be able to ask questions through their representative and timely responses should be provided. 

Failure to follow collective consultation rules entitles employees, regardless of their length of service, to make a claim to the employment tribunal for a protective award. If successful, organisations can be made to pay up to 90 days’ pay per employee who was not properly consulted prior to being made redundant.  

This compensation would be in addition to any award for unfair dismissal, if this claim was also made. A redundancy is a dismissal and, as such, needs to be done fairly. In order to ensure a fair redundancy, in addition to consultation, organisations should ensure that there is a genuine need for redundancies, the selection pool has been drafted appropriately and the selection criteria used is objective. Redundancy dismissals must not involve any discrimination element.  

The above sets out the rules in place for large redundancies carried out under UK law. P&O argues the circumstances involved mean that its staff are not subject to these laws and so these rules don’t apply. In any case, it is looking to conclude the situation for each employee by offering them a settlement agreement which would, in return for a sum of money, preclude claims being made to the tribunal. If any employee chose not to consent to this agreement and proceeded to make a claim for unfair dismissal or failure to consult, an employment tribunal would first need to determine whether it has jurisdiction to hear the claim. In effect, it would be deciding whether UK employment law applied in the first place. This could be a tricky determination to make, taking into consideration where the employees are based and what their contracts say as to whose laws govern them.  

HR-inform provides the CIPD’s employment law helpline for members, offering UK and Irish employment law advice.  

CIPD comment on P&O redundancies: https://www.cipd.co.uk/about/media/press/180322p-o-firings 

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