On Thursday morning, news broke that P&O Ferries (P&O) had taken the decision to terminate the employment of 800 staff members with immediate effect. While the story has already attracted national media attention, it is important to understand the potential legal implications behind the decision, which has attracted heavy criticism.
The law on collective redundancy rules mean that an employer proposing to make 20 or more staff redundant within 90 days or less in one establishment must consult on its proposal before any dismissals take effect. In cases such as this where an employer is proposing to make 100 or more redundancies within 90 days, consultation must begin at least 45 days before the first dismissal takes effect.
Additionally, the employer must notify the Secretary of State in writing of the proposed redundancies before it gives notice to the affected members of staff that their contracts will be terminated. A failure to notify the Secretary of State beforehand is a criminal offence for which both P&O and its directors can be prosecuted and could result in an unlimited fine.
UK law sets out a strict consultation process which should be followed prior to any redundancies. The employer must provide certain information to the appropriate representatives of the affected staff members, such as a trade union. This information includes but is not limited to: the reasons for the proposed dismissals; the numbers and descriptions of employees whom it is proposed to dismiss as redundant; and the proposed method of carrying out the dismissals, with proper regard to any agreed procedure, including the period over which the dismissals are to take effect.
If P&O have failed to properly consult staff, the consequences are wide ranging. First, an employment tribunal could grant a protective award for up to 90 days’ gross pay per staff member. Second, P&O could be met with claims of unfair dismissal from staff with over two years’ service which if successful, would entitle them to receive compensation. Additionally, the recognised trade unions (such as RMT and Nautilus International) can claim against P&O for their failure to inform and consult. Finally, if P&O failed to properly notify the Secretary of State, they could be held criminally liable and face an unlimited fine.
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.
