P&O Shows How Companies Buy Their Way Around Labor Laws - Bloomberg

At 7:39 a.m. on Thursday morning, U.K.-based P&O Ferries sent a tweet to customers waiting to get boats to Calais in northern France, Ireland and the Netherlands. “Regretfully, P&O Ferries services are unable to run for the next few hours.” It apologized for the inconvenience. Many similar tweets have followed.

What the company didn’t mention – and has still said very little about – was its decision to sack 800 of its British ship officers, captains, pilots and crew, by pre-recorded video message. It will replace them with casual staff provided by employment agencies, supposedly at half the cost. Its website still only refers to “a programme of work” to become more competitive and efficient.

“Fire and rehire” isn’t a new tactic for cutting costs by employing workers on worse terms, or replacing them with cheaper labor. But this episode stands out for its scale, its brutality and the way it tramples over British employment law.

The U.K., like many countries, has seen cuts to pay and benefits for many types of jobs in recent decades. Twentieth century-style corporate welfare that provided many people with holiday and sick pay, a well-supported pension fund, even health insurance, has been in decline – and is rarely available at all for supposedly-temporary agency staff or gig workers.

Full-time employees as a share of Britain’s total workforce fell after the 2008 financial crisis, dropping below 63% from about 65%. The percentage jumped in 2020 because many casual workers simply lost their jobs during the Covid crisis.

A government-commissioned review into precarious work in 2017 decided that full-time staff were still a good proportion of the work force. Worries about increased insecurity due to Britain’s light-touch employment law may be overstated, it said. (In fact, the main thing politicians took from the review was that too many people were claiming to be self-employed – and paying too little tax – when they were working long-term for a single company.)

But there are still concerns that “fire and rehire” is becoming more common. A poll commissioned last year by the Trades Union Congress – the association of unions in Britain – found that one-in-10 British workers were being forced to reapply for their existing jobs on worse terms and conditions. Among the young, it was almost one in five.

However, making an entire workforce redundant with no prior notice and no consultation, which is what P&O did, is uncommonly shocking and a breach of U.K. law, according to union representatives and two U.K. employment lawyers.

Neither P&O Ferries nor its parent company, Dubai-based ports operator DP World Plc, responded to requests for comment.

The problem for workers is that the penalties faced by employers for breaking the law aren’t harsh. A collective redundancy of more than 100 people requires companies to consult with unions or representatives for 45 days. Failure to do so is punishable with protective payments for staff of as many as 90 days full pay on top of any layoff payments due in their contracts.

“The weakness of the law is that it is cheaper for companies with deep pockets to cynically break the law and pay off workers than to follow it,” said Neil Todd, a trade union law expert at Thompsons Solicitors, a specialist law firm that is acting for the union that represents P&O workers.

P&O told staff that Covid-19 had undermined passenger numbers and caused $130 million in losses for the ferry business last year. The company, which took government pandemic support funds during the crisis, is part of the larger, profitable DP World. This month, the parent company reported a 6% rise in profits to $900 million for 2021 and said it was well-placed to meet its debt-to-earnings reduction target.

P&O Ferries’ seafaring staff might be subject to the law of the country where their ships are registered – Cyprus – rather than U.K. law. However, Beth Hale, a partner at specialist employment law firm CM Murray, said many employees should be able to show a strong enough connection to the U.K. to bring claims under British law.

P&O also seems to be acknowledging this by offering enough in redundancy settlements to cover most of what staff might be entitled to including the 90-day protective payments. The company probably just wanted to get it done quickly and realized that pleading special circumstances due to the effects of Covid would not likely have helped, Hale said.

Just last year, Britain’s top appeal court for employment claims ruled that even entering bankruptcy didn’t justify skipping employee consultation over mass redundancies. It was reviewing claims for protective payments against Carillion Plc, a construction and services firm that collapsed in 2018.

About 250 French employees of P&O Ferries weren’t fired, according to a Calais-based newspaper. That’s probably because French employment law is much stronger. But this case isn’t linked to Brexit: The floor provided by European Union regulations is weaker then either British or French rules.

Unfair, badly managed layoffs are a fact of life in Britain as elsewhere, but the scale and severity of this breach of law is extreme. The 180-year-old P&O brand is a byword for sea-travel in Britain and is shared with P&O Cruises, part of Carnival Corp., although the ferry arm has been owned by Dubai-based companies since 2006.

The British government isn’t happy and might try to claw back 10 million pounds ($13 million) of the Covid support money that P&O got. The company might just cough that up and move on. All in all, this episode sets a very bad precedent that highlights feeble protections for employees when companies can buy their way out of legal obligations. Others will surely follow.

More From Bloomberg Opinion:

Want more from Bloomberg Opinion? Terminal readers, head to OPIN <GO>. Web readers, click here.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Paul J. Davies at [email protected]

To contact the editor responsible for this story:
Mark Gilbert at [email protected]

source: https://www.bloomberg.com/opinion/articles/2022-03-21/p-o-shows-how-companies-buy-their-way-around-labor-laws

Your content is great. However, if any of the content contained herein violates any rights of yours, including those of copyright, please contact us immediately by e-mail at media[@]kissrpr.com.