P&O Ferries hit the headlines this week for all the wrong reasons and may well be wondering how detrimental their decisions will be to their reputation and future business in what has become a PR disaster.
CEO Peter Hebblethwaite’s appearance in front of the Business and Transport Select Committees has only served to fan the flames regarding the lawfulness of the actions taken by the company and the nature of the legal loopholes exploited. Grant Shapps, the Transport Secretary, has now called upon Mr Hebblethwaite to resign.
It’s clear that there was a deliberate breach by P&O of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) requiring P&O to consult with their employees’ representatives (i.e. the trades union of which they are members) before carrying out a collective redundancy exercise. Although breaching s188 TULRCA isn’t a criminal matter, failure properly to consult with representatives means significant compensation is due to the dismissed employees. This is something P&O acknowledge and have stated that they intend to pay.
It’s also clear that P&O are hoping to exploit loopholes specific to crew of vessels not registered in the UK, such as the fact they don’t need to pay them National Minimum Wage or follow the same notification requirements for collective redundancies under TULRCA. Although failure to notify the right authorities can lead to criminal liability under TULRCA, P&O’s case is that they have complied with what they were required to do and have notified the appropriate authorities – it's just that those authorities don’t include the UK government. This is something which is subject to investigation.
Some queries have also been raised about the inclusion of a non-disclosure clause in settlement agreements offered to crew who were made redundant. Whilst confidentiality is often seen as being a “standard” term of employment settlement agreements, such clauses are not always be appropriate depending on their scope. As with many things, the devil will be in the details of the clauses in the agreements, which are not publicly available.
Many companies face situations where they need to re-structure or have a mass redundancy situation. P&O Ferries is an extreme example of a business taking a big risk to achieve a result which they considered necessary. As a result, they may pay a heavy price both in courts of law and in the court of public opinion. Only time will tell.