Final Warning: P&O Ferries dealt ultimatum to re-employ sacked workers

April 6, 2022

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5 min read

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What's going on here?

Transport Secretary Grant Shapps gave Peter Hebblethwaite, the boss of P&O Ferries, “one final opportunity” to re-employ 800 sacked employees on their previous salaries.

What does this mean?

 

On Thursday 17th March, in a short video message delivered by one of the company’s senior executives, P&O Ferries abruptly made 800 employees redundant. They announced that replacements would be found in agency workers paid less than the minimum wage. Understandably, this was met with shock and outrage from employees, politicians and union leaders. Redundancy is never popular, but the unceremonious and impersonal method of its delivery seemed to scream a complete lack of feeling.

Following the mass redundancy, Transport Secretary Grant Shapps issued Peter Hebblethwaite a final warning. If the P&O boss failed to re-employ former employees on their previous salaries, the Government would make it illegal for ferry firms operating from UK ports to pay less than the minimum wage. The UK minimum wage is ÂŁ8.91 per hour for workers over the age 23. The average rate paid to the agency staff brought in by P&O Ferries would be ÂŁ5.50, which is in line with international maritime standards. Thus, the proposed measures should P&O fail to re-employ former employees, would have curtailed the extent to which their mass redundancy plan would save them money on wages.

As Shapps made clear in his letter, the reversal was not simply about reemploying former employees – he recognised that many might well not have wanted their jobs back after this saga – but also the final chance to salvage the company’s and Hebblethwaite’s reputation. The transport secretary said Hebblethwaite’s attitude demonstrated “contempt for workers who have given years of service at your company”.

What's the big picture effect?

The redundancy scandal initially seemed to highlight the influence that unions still hold in the UK. The transport secretary’s proposals complied with the Rail, Maritime and Transport Workers Union’s statement, which said it would not accept the National Minimum Wage for its members, and that P&O Ferries should honour employees’ existing contracts of employment if they choose to take their jobs back.

The union’s national secretary, Darren Proctor, expressed concern about the conditions of employment in the seafaring industry. He said that the tendency of ferry operators to pay below minimum wage had “contributed to the decimation of UK seafarers”. He hopes that higher wages will create more opportunities for UK workers, by making the industry a more attractive and sustainable employment option. As Proctor told BBC Radio 4’s Today programme, these measures would have a cost – and that cost would most likely be met by consumers. People who travel on these ferries would probably see a slight rise in prices, but that is the necessary cost of “decent terms and conditions and decent service and safe vessels” says Proctor.

Other travel companies have experienced a boost in demand following the move.

A Eurotunnel spokesman told the BBC that the company had seen a significant increase in bookings since P&O’s redundancy scandal – greater even than the rise experienced after Covid-19 restrictions were removed. So, consumers seem to be voting with their feet after the outrage caused P&O Ferries, demonstrating that many customers value good company values and ethos over finding the cheapest option.

However, this week we have seen that all but one former P&O employee has accepted their redundancy pay-off, leading to outrage from unions who feel the company have gotten away with their actions. A spokesperson for the Nautilus union, which represented around a third of the sacked crew, said: “P&O has gotten away with it. There’s no fine, there’s no legal action, there’s only words and hot air”. Last week, Boris Johnson told MPs: “We will take them to court, we will defend the rights of British workers… P&O plainly aren’t going to get away with it:. However, this Wednesday, the Transport Secretary admitted: “The Government is not in a position to take court action”. This represents a complete back-track on the Government’s initial stance: a lack of consistency which has disappointed and angered many.

P&O’s reputation and credibility have suffered considerably in the wake of their actions. The firm said it had to replace crews because it was losing ÂŁ100m a year and would not be a viable business without making the changes. But they have also claimed that their decision to make workers redundant was not just about saving money on wages: “The predicted savings we announced are not solely coming from the reduction in wages, but from removing job duplication and the benefits we will see from increased flexibility”. It also claimed that it would welcome a rise in the minimum wage for all seafaring workers; hoping such a rise would create “a level playing field when it comes to pay and conditions on British ferry routes.” In light of recent events, however, these claims appear difficult to believe.

UK law requires that a company who wants to make 20 or more staff redundant within 90 days runs a consultation before doing so. A company dismissing over 100 people must give advance written notice to the UK Business Secretary. Mr Hebblethwaite admitted last week that making 800 workers redundant without consulting unions or the Government first broke the law. However, he argued that no union would have accepted his proposals and so he thought it easier to compensate workers “in full” instead. The fact that Hebblewaithe knew that his plans would not pass by unions demonstrates that he was well aware of the unacceptable nature of his own actions. But he went ahead anyway, hoping to escape the restrictions of the unions and of the law.

According to the Trades Union Congress (TUC), P&O’s actions sought to exploit the same loopholes in British law that saw many employers during the Covid-19 pandemic force their staff to accept worse terms and conditions under threat of redundancy. The TUC has urged the Government to introduce an employment bill as a matter of urgency, to eradicate such weaknesses in the law. At a time when we are witnessing a cost-of-living crisis, it is becoming all the more imperative that employers look out for the welfare of their employees and pay them fairly for the work they do.

Report written by Elizabeth Ambrose

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