Did P&O break the law?

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Elizabeth Hodgetts

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Elizabeth Hodgetts has recently concluded a protective award multiple. The issues included what constituted an establishment, whether elections should have taken place, and whether consultation was meaningful.

Below, Elizabeth considers the statutory obligations engaged in a large-scale dismissal exercise, in the context of the recent and widely-reported P & O case. Did P & O ‘break the law’, and if so, how?

Did P & O “break the law”? This phrase, beloved of politicians and the media, engages a number of legal questions. Here are some of them.

The duty to consult

S. 188 TULRCA 1992 provides for the duty to consult with unions, employee representatives or employees themselves, if the employer proposes to dismiss 20 or more employees from one establishment within a period of 90 days or less. Consultation should start in good time and in any event:

            (a) if dismissing 20-99 employees, not less than 30 days before the date that the first dismissal takes effect,

            (b) if dismissing 100+ employees, not less than 45 days before that date.

Although s. 285 TULRCA 1992 excludes the application of certain provisions of TULRCA where, under his contract the employee works outside Great Britain, the application of s. 188 is not thereby excluded.

To determine whether 20 or more employees are proposed to be dismissed from one establishment, the question is,  applying Rockfon v Specialarbejderforbundet I Danmark 1996 ICR 673, ECJ, and USDAW v Ethel Austin Ltd2015 ICR 675,  ECJ, what is the unit to which the workers are assigned to carry out their duties. In  Seahorse Maritime Ltd v Nautilus International 2018 EWCA Civ 2789, CA, it was held that each ship was a separate establishment, and that all crew were assigned to particular ships because most returned, rota after rota, to the same ship for periods of time. It is not known from the reported facts on the P & O case,  whether employees were likely to be regarded as assigned to individual ships, or to a wider establishment. 

S. 188(7) TULRCA 1992 provides for a ‘special circumstances’ defence. On the reported facts, notwithstanding the pandemic, it seems unlikely that P & O could have successfully deployed it, applying Clarks of Hove Ltd v Bakers Union 1978 1 WLR 1207, CA, and Carillion Services Ltd (In Compulsory Liquidation) v Benson 2022 IRLR 39, EAT. Moreover, as the EAT said in Carillion, even if dismissals are impossible to avoid, there is still value in consulting about other matters including how to mitigate the consequences of dismissal.

The duty to notify the Secretary of State

S. 193 TULRCA 1992 provides for the obligation to notify the Secretary of State in the same circumstances. However, where the employees concerned are members of the crew of a seagoing vessel which is registered at a port outside Great Britain, s. 193A provides for the obligation to notify the competent authority of state where the vessel is registered, instead.  It appears that the ships were indeed registered outside Great Britain.

S. 194 TULRCA 1992 provides that a failure to notify in accordance with s. 193 is a summary-only offence; and if committed by a body corporate with the consent or connivance of, or is attributable to neglect on the part of, any director, manager [etc], he as well as the body corporate is guilty of the offence. However,  s. 194 does not refer to s.193A.

For completeness, s. 285 TULRCA 1992 excludes the application of s. 193 and s. 194, where under his contract of employment, the employee works outside Great Britain. Work on a ship registered in the UK is treated as working in Great Britain, unless the ship is registered at a port outside Great Britain, or the employment is wholly outside GB, or the employee is not ordinarily resident in GB.

Unfair dismissal rights

S. 94 ERA 1996 provides for the right not to be unfairly dismissed, subject to qualifying service and subject to exclusions (see below). Again subject to exclusions, s. 98(1) requires the employer to show a potentially fair reason for the dismissal.  It is reported in the media that all the employees were either replaced by agency staff, or offered re-engagement on lower pay. This does not on the reported facts look like a redundancy situation as defined by s. 139; subject to exclusions, it would appear that P & O would have to rely on some other substantial reason for dismissal.

Again subject to exclusions, s. 98(4) ERA 1996 requires that the Tribunal assess whether the dismissal was fair in all the circumstances (having regard to its size and administrative resources, among other things). The CEO of P & O deployed the word “futile” before the House of Commons Select Committee, consciously or unconsciously echoing the language in Polkey. Again subject to exclusions, it would be for P & O to show that consultation would have made no difference: a very high hurdle to surmount.

However, s. 199 ERA 1996 provides that the provisions of Part X (unfair dismissal rights) apply to employment on board a ship only if (a) it is registered in a port in Great Britain, (b) under his contract of employment the employee does not work wholly outside Great Britain, and (c) the employee is ordinarily resident in Great Britain.

Right to redundancy payment

S. 135 ERA 1996 provides for the right to redundancy payment, subject to qualifying service.

The right is not excluded by virtue of s. 199.

Contracting out

Finally, of course, an employer can contract out of the obligations under s. 188 TULRCA 1992 and ss. 98 and 135 ERA 1996, if the statutory requirements for contracting out pursuant to s. 288 TULRCA 1992 and s. 203 ERA 1996 respectively, are satisfied. It appears from the reports that, save in the case of one employee, P & O has done precisely that.

Written by Elizabeth Hodgetts

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