P&O scandal: a “free pass to act with impunity”

20 Mar 2023

The Conservative government has given rogue employers a “free pass to act with impunity” following the P&O Ferries scandal, the TUC has warned, referring to the unlawful mass sacking of 800 seafarers a year ago.

The warning comes as the TUC publishes a new report that reveals that of the four ways P&O Ferries broke the law, the government has failed to act on each breach – both failing to punish the company and to strengthen worker protections.

The TUC says P&O Ferries also exploited loopholes in minimum wage law, which the government has failed to close, despite the introduction of the Seafarers Bill. The union body warns that without government action, another P&O Ferries-style scandal could be on the cards.

Flagrant law-breaking
The TUC sets out four breaches of law by P&O Ferries which have gone unpunished:

The duty to consult when making collective redundancies: P&O Ferries knowingly broke the law because they could price in the low cost of the financial penalties. Following the P&O Ferries scandal, the TUC called on the government to increase protective awards and sanctions to a level that would ensure employers are deterred from brazenly flouting the law. The government did not.
Unfair dismissal of workers: Since the P&O Ferries sackings, the government has taken no action to strengthen unfair dismissal protections. Ministers have launched a consultation on a draft statutory code of practice that would apply in similar situations. But even when the statutory code is in place an employer would only face a 25% increase in financial sanctions, if they flouted the law – the TUC says this won’t stop rogue employers from breaking the law.
Failure to notify the relevant government authorities: P&O Ferries failed to notify the correct state authorities. This meant a jobs rescue bid couldn’t be launched. Following the P&O Ferries scandal the government has failed to act, meaning that any employer making large scale redundancies can price in the likely sanction for failing to notify the authorities.
Breach of director duties: P&O Ferries’ directors admitted deliberately breaching the law – and the TUC believes that the directors breached their fiduciary duties. The Insolvency Services is responsible for the initiation of director disqualification proceedings but despite serious acts of misconduct, no action has been taken against the P&O Ferries’ directors. The government has also failed to take action to deter other directors behaving like this in the future.

The TUC adds that the government inadequately acted after P&O Ferries bypassed the law by exploiting loopholes in minimum wage legislation. The new Seafarers Bill widens the scope of the minimum wage, which currently has very limited application to seafarers.

However, the TUC warns there are gaping loopholes in the Bill, including requiring ships to make a certain number of UK stops to fall within the law, meaning that employers whose ships don’t reach a required threshold of using UK ports a certain number of times could still dodge it.

According to the union body, when the replacement crew were first introduced after the mass sacking, P&O Ferries breached international safety standards by failing to ensure that the replacement crew were properly acquainted with safety procedures.

Maritime inspectors listed an unprecedented 31 separate failings on a P&O Ferries vessel detained last year, ranging from problems with fire safety to lifeboat drills.

Failing working people
The TUC has accused the government of “failing working people” following the P&O Ferries dismissals. It says the mass sacking was a national scandal, which provoked serious uproar at the time from politicians across the political spectrum – including government ministers.

Then business secretary Grant Shapps stated that “where new laws are needed, we will create them, that where legal loopholes are cynically exploited, we will close them, and that where employment rights are too weak, we will strengthen them”.

Paul Scully, then business secretary, conceded that unlimited fines would be in stopping another P&O Ferries-style scandal.

The TUC says promised sanctions failed to materialise – adding the government did not rigorously pursue P&O Ferries or change the law to prevent future conduct similar to the company’s actions.

The TUC says ministers are rewarding P&O Ferries for its law breaking with government contracts. The company has lucrative deals including with the Ministry of Defence, and new freeports have been awarded to DP World and P&O Ferries – despite Grant Shapps pledging to review all their government contracts since March 2022.

Urgent action needed
The TUC says that urgent action is needed to clamp down on fire and rehire style practices and make sure another P&O Ferries-style scandal is never allowed to happen again.

The union body is calling on government to:

Increase sanctions on employers who deliberately breach the law to provide a proper deterrent.
Introduce fair pay agreements to help lift wages and prevent a race to the bottom, starting in low-paid industries, including ferries.
Give workers protection from unfair dismissal from day one in the job.
Ensure employers are required to reinstate workers where employers breach consultative duties.

TUC General Secretary Paul Nowak said:

“The mass sacking by P&O Ferries was a national scandal. It should have marked a new chapter for employment rights in the UK. But this Conservative government has failed working people and given rogue employers a free pass to act with impunity. Despite behaving like corporate gangsters, P&O Ferries has been allowed to get away scot-free because of our lax labour laws.

“Instead of boosting worker protections and closing legal loopholes, ministers sat on their hands and did next to nothing. And to add insult to injury, ministers are now actively borrowing from the P&O Ferries playbook. They are brazenly attacking the right to strike and threatening to rip up hard-won workers’ rights like holiday pay, equal pay for women and men and rest breaks.

“Workers need more power in the workplace, not less. It’s time for the government to put in place proper protections for workers who are at the mercy of bad bosses. That starts with a fair pay agreement for the ferry sector. Make no mistake. Without stronger regulation, another P&O Ferries style scandal is on the cards.”

Neil Todd, a senior trade union lawyer at Thompsons Solicitors, who acted on behalf of the RMT union at the time, said:

“P&O Ferries took the callous business decision that sacking its staff unlawfully – despite the financial penalties and public backlash it would cause – was more convenient and cheaper than engaging in meaningful consultation and complying with legal obligations. What message does it send to unscrupulous employers if P&O Ferries can get away with paying out what are to them small sums and carry on trading? P&O Ferries should have been a pivotal moment in recognising UK employment law does not go far enough to protect working people, but nothing has changed and three Conservative Prime Ministers later it is clear this is not a priority for any Conservative government.

“The financial penalties for sacking staff without notice and without any meaningful consultation need to be strengthened and there needs to be legislation that would more easily allow employees to take pre-emptive legal action before any dismissals take effect. It is only these sorts of changes which will ensure no company is emboldened ‘to do another P&O’.”