Collective consultation: Lessons learned so far from P&O Ferries

In this article our experts discuss the decision by P&O Ferries to dismiss 800 employees and replace them with a cheaper workforce. While this article does not go into the full technical details of the case as we do not know the outcome, what we do know is that the facts are complex and involve different jurisdictions but that there appears to have been a deliberate decision by the Company not to consult with the relevant Trade Unions prior to dismissing employees with immediate effect.

A joint session of Commons and transport select committees heard from Andrew Burns QC who told MPs:

“all employers with ships must give a notice to the appropriate authority 45 days before dismissal…my understanding from what I’ve been told this morning is that the notice was given to the appropriate authorities in the countries where the ships are flagged only on the day of the dismissals and not in advance.” He further stated that “it may be that (P&O Ferries) are liable to a prosecution.”

We do not yet know what the eventual outcome of this particular case will be but it does provide a useful reminder that large scale change projects will be very likely to attract a level of local or national media attention.

Most employers will not be able to fund a choice not to bother engaging with consultation, or to make creative arguments around jurisdiction and seafaring legislation, in the way the P&O may be. Their actions though emphasise that the link between the behaviour of a business in relation to employee relations decisions and the public perception of the business by its employees, stakeholders and the wider public should always be considered before embarking on significant changes.

There is a lot that can be done at the planning stage to try to ensure that any large scale change projects are as successful as they can be in the circumstances. The first consideration is often what the business is seeking to achieve and why.

What are the alternatives if the changes are not achieved? Sometimes if change is not achieved it can mean a greater number of redundancies at a later date, if not the possible failure of the whole business. Where good quality financial information can be provided to employee representatives or trade unions during the consultation process it can enhance the quality of discussions.

The other benefit for the business of a genuine consultation process is that it is possible for alternative proposals to be put forward that may work equally as well as to the current proposals.

For example, employees may agree to give up a certain benefit in order to avoid a number of redundancies or they may support a process of seeking voluntary redundancies or volunteers for changes in hours that will make the necessary difference.

Where redundancies are unfortunately inevitable the consultation process can be used to help employees to find new roles outside the company and this may include providing outplacement support or contact with local employers who are experiencing skills shortages. By working in this way, the business can not only shore up its own reputation, it can reduce the risk of claims by virtue of the fact that if employees find alternative employment quickly they are far less likely to seek to bring claims and the value of those claims is vastly reduced.

In the P&O ferries case it appears that the Company has stated that it will be making significant settlement offers to employees under the terms of settlement agreements. That being the case it is surprising that the consultation route, in which these enhanced packages could have been discussed early on, was not the first port of call prior to communicating dismissal decisions.

Often voluntary redundancy packages will result in the ability to reach agreement with large numbers of employees by way of settlement agreements prior to or alongside formal consultation getting underway. It is always harder (and more expensive) to negotiate with a group of people who already feel badly treated.

Our advice

In our experience it is far better to plan ahead and make arrangements for group sessions for signing settlement agreements giving employees choice over whether to take that option or complete formal consultation. In many cases the settlement agreement will be the preferred option and this greatly reduces the risk of adverse publicity.

Finally, it should be noted that the government has referenced loopholes in employment law that need to be plugged as a result of this case. It remains to be seen what specific changes will come about and we will report in later bulletins as soon as this becomes clear.