On Thursday 17 March, P&O Ferries announced the immediate redundancy of 800 unsuspecting staff members. Why? P&O revealed that it has made “a £100m loss year on year … This is not sustainable” and describes the move as “necessary” to protect the 2,200 staff that remain.
P&O is certainly not the first company to respond to financial trouble with redundancies. What constitutes a redundancy situation under English law is defined by statute and the definition encompasses situations where a business no longer needs as many employees to do particular types of work. Financial loss could possibly indicate that there is less work to go around, and therefore a reduced need for staff to do that work. The definition also covers the closure of a particular workplace within the business, which could result from an unprofitable business trying to reduce its overheads.
Even if a business finds itself in a redundancy situation, however, this does not mean that it can summarily fire staff with no consequences. Staff with at least two years’ service have the right not to be unfairly dismissed, and whilst redundancy is a potentially fair reason for dismissal, a necessary procedure must be followed before a redundancy dismissal could be considered fair. Employers who unfairly select staff for redundancy could also face discrimination claims, where an employee argues that their redundancy selection relates to a protected characteristic, like sex, race, age, or disability.
There are additional consultation requirements for employers who are proposing 20 or more redundancies at one establishment within 90 days. Failure to comply with these requirements could prove costly for employers, who risk being ordered to pay employees several weeks’ pay.
Given these considerations, you may wonder why P&O provided “no consultation and no notice”. Could it be due to the “enhanced” redundancy packages P&O said it would be serving to staff? Given that statutory redundancy pay is limited, it is not unusual for employers to offer employees larger amounts of money as an alternative in exchange for employees signing away any employment law claims. However, these agreements have their limitations.
A more likely explanation may be found in the particular laws which govern those working on ships. The ordinary statutory provisions employees base their unfair dismissal claims on simply do not apply to certain sailors. Others working aboard British ships will be covered, but only if certain technical conditions are met. These include that the employee is ordinarily resident in Great Britain, that they do not work wholly outside Great Britain under their employment contract, and that the vessel they work on is treated as belonging to a port in Great Britain.
So, have P&O found a loophole? This is a question for their lawyers, or indeed any future Employment Tribunal. It will be interesting to see how this situation develops.
If you have any queries regarding this or any other employment matter, please do not hesitate to contact a member of the team.
