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Friday, April 8, 2022
Weeks on from the initial surprise and devastation caused by P&O Ferries redundancy announcement, the aftershocks are still being felt and the latest news from the Insolvency Service perhaps the most concerning for the business.
The manner of the approach made to the loss of 786 jobs Almost universal condemnation of P&O Ferries owners DP World, sanctioning of an approach which rode roughshod over UK employment rules around redundancy seems to have had little impact.
The 3-minute video announcing the job losses in a manner wholly outside of the correct process of consultation and crews of security stationed at docked ships to prevent “incidents” amounted to a considerable PR disaster.
In truth it transpires that it was a risk P&O were happy to take, offering workers compensation above that which they might be likely be awarded by making successful unfair dismissal claims.
The calls for the CEO’s resignation and ships forced to stay docked due to health and safety concerns have had little impact.
Boris Johnson announced in Parliament, “We will take them to court, we will defend the rights of British workers, P&O plainly aren’t going to get away with it.”
Despite this forthright statement from the prime minister, the transport secretary Grant Shapps has admitted “The government are not in a position to take court
action.” Although he has asked for the CEO to be disqualified as a director due to his actions.
Threats of hefty fines from business secretary, Kwasi Kwarteng, warning P&O that it could face an unlimited fine having asked the Insolvency Service to investigate.
On April 1st the Insolvency Service announced that following its enquiries it had commenced formal criminal and civil investigations into the circumstances surrounding the recent redundancies made by P&O Ferries.
As for the 786 staff affected by the decision all but one of the crew has accepted the compensation offer with what the unions described as a “gun to their head” deadline to accept the P&O terms after which they would have to take their own direct action through the Employment Tribunal.
The gamble for the business appears to have worked for now but the longer-term impact on the sector may see the introduction of tougher legislation to prevent companies using owners deep pockets to short cut due process in redundancy matters.
The Process
When a company finds itself in such financial difficulties the need to bring about a remedy is immediate, and this can be at odds with what they are obliged to do in accord with UK employment law.
If the decision to make staff redundant is followed by an all too eager rush to select and dismiss the business can find itself on the wrong end of hefty time and financial cost in the shape of tribunal proceedings.
It’s therefore important to take a considered and methodical approach and where possible engage and involve your professional advisers to ensure no breach of legal process occurs.
If you don’t consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.
You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.
There are no set rules to follow if there are fewer than 20 redundancies planned, but it’s good practice to fully consult employees and their representatives. An employment tribunal could decide that you’ve dismissed your staff unfairly if you don’t.
Checklist
- Consider the plan and the likely numbers involved and who needs to be notified. E.g. The Redundancy Payments Service (RPS) require completion of form HR1 if you are making 20 or more staff redundant.
- Follow a fair and reasonable redundancy procedure
- Consider whether employee representatives require to be elected/consulted
- Consult with employees on the business rationale for the redundancies
- Identify a redundancy pool
- Adopt fair selection criteria
- Before launching into formal redundancy options consider the alternatives such as :-
- Natural wastage
- Restrictions on recruitment
- Retraining and redeployment to other parts of the organisation
- Reduction or elimination of overtime
- Part time working
- Salary reduction
Ensure you clearly document all the above
NOTE: If you fail to follow the above then any dismissal may be unfair.
The following is a link to the Government’s redundancy payment calculator: – https://www.gov.uk/calculate-your-redundancy-pay
If your organisation is facing the prospect of cost savings which may result in redundancies, we would recommend an initial call to review your plans and help you through this process.
If you are at all concerned about the issues raised in the above article and wish to consult an expert in the field, please don’t hesitate to contact Robert Gibson or Martha Craven. Call Robert Gibson or Martha Craven on 0191 2328451 or e-mail robertgibson@samuelphillips.co.uk or marthacraven@samuelphillips.co.uk
Written by Robert Gibson, Senior Consultant - Employment Law
Robert is a Senior Consultant at Samuel Phillips and specialises in employment and business matters. He advises in relation to employment and shareholder disputes, including pensions and related issues.
