P&O Ferries boss, Peter Hebblethwaite, has admitted that the decision to dismiss 800 workers without notice was unlawful.
He has apologised for the distress caused by the cuts, but said it was the only way to save the business and that workers would receive compensation in return for waiving their right to pursue legal action against the business.
This decision is clearly devastating for the employees affected and the wider business as a whole and it appears that P&O have failed to comply with their legal obligation to carry out a fair redundancy process.
Under UK law, when a business is proposing to make 20 or more employees redundant at the same establishment, within a period of 90 days or less, it is classed as a ‘collective redundancy’. In these circumstances, where an employer proposes to make 20 to 99 redundancies, it must consult with staff for at least 30 days before the first dismissal takes place. Where 100 or more redundancies are proposed, the minimum period of consultation is 45 days. Furthermore, employers must notify the secretary of state at least 45 days in advance of the dismissals.
As part of a fair process, employers are required to provide employees and their representatives with key information about the proposed redundancies including the reasons for redundancies, the number and description of employees potentially at risk and how they will be selected. Meaningful consultation should then take place including discussing ways of avoiding redundancies and mitigating the consequences.
A failure to properly inform and consult with staff at risk of redundancy can give rise to costly Employment Tribunal claims, including a ‘protective award’ for failing to inform and consult, as well as claims for unfair dismissal.
P&O’s potential liabilities are therefore up to 90 days’ pay for each of the 800 affected employees, plus any loss of earnings flowing from each unfair dismissal.
In return for accepting an enhanced redundancy package, employees will be required to waive their legal rights to bring claims against the business.
Businesses that fail to meet their legal and moral obligations to treat staff fairly not only risk potential costly Employment Tribunal claims, but also long-lasting damage to staff morale, employee relations and reputation.
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