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Collective Consultation – What did P&O do wrong?

A redundancy situation is difficult for all concerned. Such difficulties are exacerbated where an employer fails (intentionally or otherwise) to follow the required statutory collective consultation procedures.

In a widely reported recent instance, on the 17th March 2022 P&O Ferries took the decision to make 786 crew members redundant with immediate effect. P&O signalled their intention to utilise agency workers in their place moving forwards and looked to highlight cost saving measures that they argued needed to be implemented across the business.

In this article, have considered the rights of the employees affected by this decision, specifically any potential requirements for collective consultation which may have applied.

When must collective consultation take place?

It is good practice for employers to collectively consult with their employees in most redundancy situations even where the statutory requirement does not apply.

Under the  Trade Union and Labour Relations (Consolidation) Act 1992 Collective consultation must take place by law where an employer is proposing to make 20 or more employees redundant, from one establishment within 90 days or less.

Where an employer plans to make between 20 to 99 employees redundant the consultation must begin at least 30 days before the first redundancies are due to take place. As would (potentially) be the case with P&O, where an employer intends to make 100 or more redundancies consultation must begin at least 45 days before the first redundancies are due to take place.

It appears likely in this instance that P&O chose to bypass this process, a fact which was apparently confirmed by their CEO Peter Hebblethwaite when he was attended the Commons committee to discuss the recent events. He admitted, “There’s absolutely no doubt we were required to consult with the unions. We chose not to do that.”

What is collective consultation?

Collective consultation is the process by which an employer consults with any recognised trade union, or if there is no such union, employee representatives.

As part of this collective consultation P&O should have looked to identify the roles at risk of redundancy and outlined the basis upon which they intended to select employees from this pool. They would then be expected to have discussed with those affected the planned changes, the reasoning behind the planned changes and engaged in an open and honest discussion around any ways to avoid or reduce the number of redundancies and the impact of these redundancies.

Notifying the Secretary of State

Alongside engaging in consultation with the affected employees, where an employer intends to make 20 or more employees redundant at one establishment within a period of 90 days or less they are obliged to notify the Government of the same. A failure to do so may result in prosecution and a fine, on summary conviction, for the company and/or officer of the company.

This remains a contentious issue; understandably many people wish to see further action taken against P&O and the individuals concerned in these circumstances. P&O however argue that they are not subject to this legal duty by virtue of the fact that all of the vessels involved were registered outside the UK. Whether or not further action will be taken against the company or the individual directors remains to be seen.

What does it mean for P&O and those involved?

As a result of their failure to collectively consult P&O may have to pay the employees affected compensation, referred to as a protective award. This can be up to 90 days full pay for each employee affected.

In addition P&O would also be unlikely to successfully defend claims for unfair dismissal following their failure to engage in a proper process prior to making the redundancies.

P&O have announced that the affected employees will receive an “enhanced severance package” totalling a sum of £36.5 million. Unsurprisingly, these packages will be subject to the affected employees signing a settlement agreement. Accordingly, whilst we may never fully know the outcome of any prospective Tribunal cases should these claims settle, the P&O matter remains a timeous reminders to employers of the importance of statutory obligations in large scale redundancies.