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P&O Ferries: a lesson in how not to manage collective redundancies?

The public outcry over P&O Ferries’ instant dismissal of around 800 workers has shone a light on what appear to be significant breaches of the law relating to collective redundancies. Whilst there remains an element of speculation as to exactly what happened, P&O’s chief executive, Peter Hebblethwaite, has admitted to a committee of MPs that the company broke the law when dismissing the workers and he is now facing growing pressure to resign. It would seem that the rules on collective redundancies were not followed.

The rules around collective redundancies

Collective redundancies are a creation of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the ‘Act’), which applies when the employer is proposing to dismiss, as redundant, 20 or more employees at one organisation within a period of 90 days or less. The term ‘redundant’ does not apply only to traditional redundancies where jobs disappear or the employer needs fewer employees; Section 188 also covers situations where the employer terminates the contract of employment and offers re-engagement on new terms.

Having established that section 188 applies, the employer must then address a number of procedural and substantive matters in order to ensure compliance with the legislation. These matters are numerous and include (but are not limited to):

  • The employer’s duty is to consult with appropriate representatives of the affected employees. The employer must identify the affected employees and then who their representatives are. They may be a recognised Trade Union or workplace body or, in other cases, the employer may be required to facilitate an election whereby the affected employees can elect their representatives.
  • There should be consultation on reaching agreement on matters such as avoiding dismissals , reducing the number of dismissals and mitigating their consequences.
  • There are minimum time limits – where the employer is proposing to dismiss between 20 and 99 employees within a period of 90 days, consultation must commence at least 30 days before the first of the dismissals takes effect. Where the employer proposes to dismiss 100 or more employees within a 90-day period, consultation must begin at least 45 days before the first dismissal takes effect.
  • The employer must notify the Secretary of State for Business, Energy and Industrial Strategy (BEIS) of the redundancies by submitting form HR1.

A breach of section 188 will give rise to the potential liability for an Employment Tribunal claim. Such claims can be brought by the recognised Trade Union, other representatives or the employees themselves, all subject to the nature of the breach. The maximum Tribunal award is 90 days’ pay – that is per employee.

Consultation is key

Employers should also remember that collective consultation is no substitute for individual consultation. A failure to consult individually can also give rise to a Tribunal claim for unfair dismissal with exposure to further significant financial awards.

Perhaps one of the most striking parts of the P&O story is that many of its workers have been offered generous settlement deals . It is reported that the total sum offered by P&O to the workers is over £35 million, and that those who accept will be required to sign non-disclosure agreements.

As P&O have illustrated, getting redundancies wrong can be expensive and lead to serious industrial and public relations issues. If your business needs assistance in carrying out important restructuring, our employment team at Andrew Jackson can guide you through all stages of the process.

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