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Sailing Around the Laws of Redundancy

It would be very easy to join the chorus of outrage that has followed P&O’s dismissal of 800 of its staff. Certainly, the manner in which it was carried out – a pre-recorded video announcement played to staff, presumably simultaneously, was lacking in empathy and has been likened to the worse form of “neo-liberalism”. “How could they do such a thing? Surely this is illegal?” were the plaintiff cries of many.

Without access to the relevant financial and operational information, establishing the rationale behind the company’s decision is a much harder task. Whether those who took the decision to embark upon this “shock” strategy possess a conscience or not, we can be sure that they did not do so without having weighed up the legal and financial consequences.

Many articles appearing in the press and social media make the assumption that a redundancy situation has arisen and, having made that assumption, speak of various legal breaches such as the requirement to consult with the workforce representatives for a minimum 45-day period where 100 or more redundancies are contemplated, or the requirement to notify the Secretary of State where 20 or more redundancies are planned.

However, when we consider the relevant statutory definition of redundancy – a cessation or reduction in the requirement for employees to carry out work of a particular kind – it is not at all clear that a redundancy situation has arisen. From what we are led to believe, P&O plans to replace the staff it has dismissed by third party agency staff on less favourable terms. The company claims that this is the only way it can avoid an annual loss of £100M. This may well make financial sense, but it does not appear to satisfy the statutory definition: the need to replace the workforce (with a cheaper one) does not equate to the need to reduce the workforce.

Another fundamental question which must be considered is whether the action taken by P&O arises at an “establishment in the UK” – another key factor for UK redundancy laws to apply. Given the international nature of its operations, it is quite possible that many, if not all, of the 800 or so affected workers are not actually employees, employed at an establishment in the UK. It is entirely possible for a ferry operator to serve UK ports without actually having any base in within the UK jurisdictions just as a foreign airline may operate flights to and from UK airports without a permanent presence on the ground. The picture will become clearer in the next few months, no doubt.

Potential legal obstacles aside, it is important to bear in mind that sudden firings of this kind are not unique to P&O, as many former leisure industry workers will have experienced over the past couple of years. Even businesses operating wholly within the jurisdiction of UK employment laws can in certain circumstances justify circumvention of those laws – usually when faced with imminent insolvency.

Whether such circumstances will apply in the present case may never be established as the dismissed workers are to be offered severance agreements. It can be assumed that the majority will accept these but those who decide to fight on are likely to face a wait of several years before their cases are determined, given the severe backlogs in the employment tribunals as a result of the COVID pandemic.

This blog was written by:  Mark Higgins

DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.