John Lansdown, who was previously employed as a chef with P&O Ferries, has announced he is suing the company for a staggering £76 million, the like of which has never been awarded in a UK employment case.
What happened to the P&O staff?
John was one of 800 staff who were dismissed with immediate effect via a pre-recorded video on March 17th. The staff were then escorted off their ships by security teams as agency workers on less than the minimum wage waited in buses to replace them.
Despite this shocking treatment, John is the only P&O ex-employee to launch a legal action against the company. He has filed a tribunal claim for unfair dismissal, racial discrimination and harassment, accusing the company of treating him unfairly because he is British and eligible for the minimum wage.
P&O Ferries has defended its actions, claiming that the mass job cuts were “categorically not based on race or the nationality of the staff involved.” In a statement, the company said it “needed fundamental change to make it viable – this decision was the only way to save the business.”
As an employment lawyer, I have been following this case with interest as whatever happens here could influence the actions of other UK employers when faced with having to make mass redundancies.
The government is reportedly considering whether the law needs to be reviewed and overhauled to prevent others from following suit. The real issue is whether the sanctions are so light that other companies could reasonably think it is worth ignoring the legislation as a price of doing business?
Is £76 million a realistic figure for an ex-employee to claim for?
The former chef has said that the £76m he is seeking comprises financial compensation and exemplary damages to deter the company from repeating their actions. He claims that “everyone in this country has a vested interest in not allowing the company’s unscrupulous actions and grotesque disregard for due process in this country to stand. If P&O Ferries are allowed to get away with this, it will be a bellwether for the entire UK corporate landscape.”
If his claim is successful, he will establish a trust to help protect fellow seafarers’ wages from levelling down, and to campaign to outlaw ‘fire and rehire’ in the UK.
‘Fire and rehire’ is a hugely controversial method used by some companies, usually when in dire financial straits. It involves sacking staff and then telling them that they can apply for their old jobs on less favourable terms. This is a tactic that has been deployed by several high profile UK employers but last year, ministers blocked a bill that aimed to ban the practice, despite public support.
Sacking and then rehiring staff on inferior terms has been a growing trend since the start of the first lockdown, with 9% of workers affected by such a scheme in the first year of the pandemic.
However, what P&O has done appears to be slightly different from ‘fire and rehire’ as rather than rehiring staff to their old jobs, it has replaced them with agency workers and said that sacked staff could join those agencies if they so wished. This approach has meant they have avoided having to renegotiate terms with staff and their representatives.
Whatever your viewpoint on the actions of P&O, the reality is that even if Mr Lansdown can establish race discrimination, and persuade an employment tribunal to award exemplary damages, these are likely to be in the thousands rather than multiple millions.
So has P&O actually broken the law?
It does appear that elements of employment law have been wholly ignored in two specific areas, yet neither will necessarily lead to sanctions from the UK government.
1 . Employers are legally required to consult with workers during a statutory notice period before making them redundant.
P&O initially claimed that since its ships are registered in Jersey, it has not broken any UK laws regarding consultation with trade unions or employees. There is an argument, however, to say that since the vessels operate from UK ports and in UK waters and staff are UK citizens and paid in sterling, both ships and workers are sufficiently connected to the country for UK laws to apply.
Addressing a House of Commons hearing on 24 March, chief executive Peter Hebblethwaite admitted that they knowingly broke the law, telling MPs that “There’s absolutely no doubt we were required to consult with the unions. We chose not to do that.”
Indeed, the company has offered enhanced compensation to the redundant workers, with higher payoffs than they could win from tribunals, despite their illegal treatment. Media reports claim that P&O Ferries has offered £36.5 million in redundancy payments, with around 40 of its staff receiving more than £100,000 each.
They demanded that crew accept quickly without discussion or lose the offer, forfeiting their right to any legal action, and it seems their gamble might have paid off as Lansdown is the only former employee to bring a claim.
John Lansdown is clearly taking a stand, saying he wants to get justice for all his former colleagues who felt that they had “no choice” but to settle their cases. In reality, there is no prospect of an award of £76million, albeit there is clearly a strong political theme to this case.
2. Employers wishing to make more than 100 redundancies must notify the business secretary at least 45 days in advance of these dismissals.
P&O argues that it did not have to notify the UK government since an amendment to the law in 2018. It does admit however, that it did not give notice, as legally required, to the flag states for its ships which are registered in Cyprus, Bermuda and the Bahamas. This is a very technical area with facts unique to the shipping industry.
Without knowledge of the registration and crewing agreements and individual employments of contracts, it is difficult to comment on whether P&O have a defence to any prosecution that might be brought under section 194(4) of the Trade Union and Labour Relations (Consolidation) Act 1992.
However, the penalties for non-compliance with the rules on notifying the government have not acted as a major deterrent to P&O and the likelihood is that the company will avoid a significant fine. Despite the Government referencing unlimited fines, the reality is that no meaningful fine has ever been issued under the Act and up to 2015, the maximum fine that could be issued was £5,000.
Perhaps of greater deterrent to other employers is the fact that an officer of a company could be prosecuted personally and that in turn a conviction could lead to directors’ disqualification proceedings being brought against that individual on the basis that they are an unfit person to be a company director.
What will P&O’s actions mean for other UK employers?
Since the scandal broke last month, there have been widespread calls for a change to the law so that unions and employees can ask the courts to automatically stop companies following in P&O’s footsteps.
It will be interesting to see how the Lansdown case and the investigation into P&O progress but in the meantime, many people have asked whether this flagrant disregard for employment law should carry more than a financial penalty. As indicated above, there may be potential sanctions but historically, company directors have not faced personal consequences for breaching the collective redundancies legislation.
Although the P&O case possibly represents the most high profile and callous approach to collective redundancies, it certainly isn’t the first time that the legislation has been disregarded by employers in the interests of “expediency”. While there have been calls to changes in legislation, it would be extremely surprising if these changes were to be introduced by the current government, since they previously watered down the legislation which stemmed from the UK’s past membership of the European Union.
