P&O Breaking Employment Law - a Calculated Risk

P&O Breaking Employment Law - a Calculated Risk

P&O Breaking Employment Law - a Calculated Risk

Posted: 25/04/2022

The mass sacking of nearly 800 P&O workers quite rightly provoked outrage.  However, it has become clear that P&O took a calculated risk that the sacked workers would take the deal offered to them. And according to reports most if not all of them did.

On 17 March 2022 P&O dismissed 786 of its workers. The dismissals were with immediate effect and there had been no consultation with trade unions and no advance notice of dismissals. P&O said in a letter to the Business Secretary that the dismissals had been necessary as it had become clear that the business would not survive without significant changes, and that “generous” compensation packages had been offered to all staff which, at the time, 575 of them had accepted. The CEO said that no trade union would ever accept the kind of changes to contracts that were necessary and that was why there had been no information and consultation either with the workers themselves or with their trade union.

It is quite clear that the P&O strategy of making mass dismissals without complying with the requirements of employment law has not worked. The Chief Executive was hauled before a Parliamentary Committee to answer questions and the reputation of P&O has been seriously tarnished. Further, their strategy of hiring workers on cheaper contracts may not work either since the government have said that they will introduce a requirement that any workers on ships in British waters will have to receive at least the national minimum wage.

However, the fact that P&O took a calculated risk that breaking UK employment law may be worth it, highlights a fundamental weakness in UK employment law in which law breakers may face claims but the unlawful act is generally not prevented in the first place. This contrasts generally with European model in which unlawful acts are generally void. This opens the door to employers taking a calculated risk that breaking the law may be worth it so long as the employees are offered a “deal” which is attractive to them. Presumably, P&O thought that the financial costs of the deal offered to the sacked workers would be outweighed by the ongoing saving over time.

Until P&O there appeared to be little enthusiasm within government for addressing concerns about such practices. The government failed to back a Private Members bill in Parliament which would have discouraged fire and rehire practice and afforded additional protections to affected workers.

Instead, ACAS were instructed to undertake an independent review into firing and rehiring. A report was issued in June 2021 indicating potential reforms, which included (among others): strengthening unfair dismissal laws; enhancing the discretion of employment tribunals to assess business rationale; protecting continuity of employment; increasing consultation obligations; and naming and shaming employers.

In response, the government stated that it was not their intention to legislate on this, but instead ACAS should produce more comprehensive guidance for employers to encourage good practice. ACAS published this guidance in November 2021.

As recently as 22 February 2022, the government reiterated their lack of plans to legislate on this and pointed to the new ACAS guidance.

However, spurred on by the issue, the government has now announced that there will be a statutory code of practice on “fire and re-hire practices” which are used to change employees’ terms and conditions.  We await further details on what the code will say.

Brabners in Lancashire is located at Sceptre Court, Walton Summit. If you would like to discuss anything raised in this article, please give us a ring on 01772 823921, quote “Lancashare” and a member of our team will be happy to assist you. 

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