The P&O Scandal Shows Britain Is a Bosses’ Paradise
The fact P&O won't face criminal proceedings over its mass sacking of 800 workers is a reminder of the impunity enjoyed by rogue bosses in the British economy – and of the urgent need to overhaul our labour laws.
Protestors gather outside the Port of Hull to demonstrate against P&O Ferries on 18 March 2022 in Hull, England. (Ian Forsyth / Getty Images)
On 17 March this year, P&O Ferries sacked 786 officers and crew of their ferries operating in the UK, in order to replace them with agency crew on much lower wages and far worse terms and conditions. The deed was done through a pre-recorded video message and hand-delivered letters. Those on board the vessels were escorted off by hired security, past waiting replacement crews in coaches.
Long-standing collective agreements (requiring negotiation and notice to terminate) were effectively thrown overboard. As the company acknowledged in the days after, there was no prior consultation with the seafarers’ unions.
Nor was prior notice given to the UK authorities or to those of the countries in which the ships were registered. (It goes without saying that P&O Ferries had registered all their vessels under ‘flags of convenience’ from foreign registries to take advantage of lower standards.)
In fact, no warning was given to the seafarers at all. This was dismissal by ambush. Shortly afterwards, P&O Chief Executive Peter Hebblethwaite admitted in Parliament that his company had a statutory obligation to consult the workers’ unions, but decided to flout it.
‘There is absolutely no doubt that we were required to consult with the unions. We chose not to do that.’ It was, in other words, an illegal manoeuvre to circumvent trade unions and workers’ rights. And the company knew that all too well.
This was far from the only law that P&O broke. As the company acknowledged, it was required to give prior notice to authorities. It failed to do so. Workers have a right not to be unfairly dismissed, a right that seems to have been violated by the manner of dismissal and the lack of individual or collective consultation. In fact, the dismissals appear to have been automatically unfair under the TUPE regulations, which are intended to protect the rights of an employee when transferred to a new employer.
The company has not admitted—though it certainly appears arguable—that it broke the law prohibiting discrimination on grounds of nationality, by selecting almost exclusively UK seafarers for the sack. That might well be tested in the courts.
Sadly, much of the rest of this behaviour won’t be challenged in court. Before this ambush, P&O carefully calculated payoffs to the seafarers to induce them to sign away their rights to challenge what happened in courts or tribunals. Such agreements are lawful if in proper format. Each worker was given a fourteen-day ultimatum to accept the offer.
The computations were easy for P&O since the compensation in question was mostly capped by legislation. Tribunal claims would have been likely to take a year to resolve, litigation always carries a risk of losing, and the amount of likely recovery is always difficult to assess—only half of awards are paid in full and a third of awards are never paid at all. Unsurprisingly, all but one of the seafarers accepted the offer.
P&O Ferries calculated that the pay-offs to crew members would be recouped from future profits generated by the poverty wages of the new crews, who are set to work forty-hour weeks for just £3.83 an hour. In late May, Sultan Ahmed bin Sulayem, chief executive of DP World, which owns P&O, said that the company had done ‘an amazing job’ in pushing through the mass sackings.
Neutering Trade Unions
Of the many distressing features in this case, there are a couple which particularly stand out. The first is that the contemptuous disregard for the long-standing collective agreements broke no law. The collective agreements were not enforceable by the unions, nor were the procedural elements enforceable by the seafarers. The case, in other words, made a mockery of collective bargaining in the UK.
International Labour Organisation (ILO) Convention 98 obliges the UK to ‘encourage and promote’ collective bargaining machinery. The right to bargain collectively has been held by the European Court of Human Rights to be an ‘essential element’ of trade union freedom. And Article 6 of the European Social Charter seeks ‘to ensur[e] the effective exercise of the right to bargain collectively’.
These provisions to promote collective bargaining were recently reiterated in Article 399 of the Trade and Cooperation Agreement (the ‘Brexit Deal’) between the UK and the EU. Unfortunately, the UK government has the same level of regard for its international treaty obligations as P&O Ferries had for its workforce.
The second standout feature is that, while on the one hand the law denied unions and crew redress for the destruction of the collective agreements, on the other, it denied them any industrial means to protect these agreements.
The dismissal by ambush was obviously intended to preclude industrial action by the sacked and replaced workers; they no longer had jobs where they could take typical forms of industrial action. In other words, P&O’s tactic removed the binary choice of legal enforcement or industrial enforcement of collective agreements.
Elsewhere throughout Europe, freedom of association would have permitted unions to call for solidarity by other workers who could put pressure on the employer in the dispute. In the UK, however, as this issue of Tribune outlines, this is absolutely prohibited by law. All forms of solidarity action are banned on pain of injunctions enforced by contempt of court proceedings, which could result in massive fines and sequestration of a union’s assets.
In fact, this is a lesson the Rail, Maritime and Transport (RMT) union knows well. During the last P&O strike by the then National Union of Seamen (NUS) in the late 1980s, union assets were sequestered by the courts. It is highly likely the company bosses who undertook the mass sackings were aware of this precedent.
A Government for Bosses
Throughout this sorry saga, UK labour law utterly failed to protect the jobs, incomes, careers, and industrial voice of these workers.
In the first place this was because the rights of the workers were so limited. But it must also be said that the mechanisms by which such rights are enforced offered negligible restraint against an employer prepared to pay the easily calculable cost of compensation.
Government ministers acknowledged the disgraceful conduct of P&O and pledged to take action. Having defaulted on the Employment Bill promised in its Queen’s Speech in 2019, and having—apparently on the prime minister’s personal intervention—overruled the proposal to include an Employment Bill in the latest Queen’s Speech, it is not surprising that the government already appears to have rowed back on this promise.
Nine pledges were announced by the responsible minister, Grant Shapps, on 30 March. You wouldn’t know it from the media coverage, but none of these proposals would have saved a single one of the jobs lost. All were for the future—as far as the government was concerned, the sacked seafarers were a lost cause.
Space does not permit me to discuss these measures in full, but some are worth highlighting. Firstly, it was proposed that the national minimum wage (NMW) should apply to ferry workers. This would significantly increase the wages of most of P&O’s replacement crews and is the only one of the government’s proposals which puts into the hands of workers the means to enforce it because they can litigate underpayments.
However, had the dismissed P&O crew been retained, applying the NMW to them would have inflicted a savage wage cut. The effect of imposing the NMW more widely will be to undermine the agreed rates for ferry companies which have not adopted the P&O strategy. It could be argued that this measure will make conditions on ferries worse.
Another government proposal is a new Code of Practice—as yet unpublished, even in draft—on ‘fire and re-hire’. Amongst other things, this will allow tribunals to increase compensation for unfair dismissal by 25 percent where the Code has been breached and the manner of dismissal merits it.
A Code of Practice is not, of course, law. It will not therefore provide the legal levers necessary to restrain mass sackings without prior consultation. Earlier this year, the government talked out a sophisticated bill introduced by Barry Gardiner MP to end ‘fire and re-hire’ which would have given unions the right to obtain an injunction to compel employers to fulfil their duty to consult. Instead, we got flimsy guidelines.
In any event, a 25 percent uplift of an award, subject to a statutory cap, is not going to deter an employer. If compensation is to be effective as a deterrent then the cap on compensation should be removed and full compensation should be commensurate with actual loss.
Furthermore, a penalty enhancement in excess of the value of the worker’s loss should be permitted. Enforcement of awards personally against directors complicit in the lack of consultation should also be permitted, providing a check against thuggish industrial practices by bosses.
Another government proposal is to give harbour authorities power to refuse a berth to a ferry not paying the minimum wage. Surely a more effective measure would be, in the event of failure to pay the proper wages (or failure to consult), to give unions the right to apply for the traditional maritime remedy, a warrant for the arrest of the vessel concerned. But that would be too likely to have an impact.
A Collective Response
The government has also pledged to pursue ‘international agreements at the International Labour Organisation (ILO) covering an international minimum wage, a global framework for maritime training and skills, and tools to support seafarer mental health’. Even here, however, we have plenty of reason to be suspicious.
The Tories have traditionally opposed ILO worker protection measures and the announcement makes no mention of the existing ILO Maritime Labour Convention 2006, which covers maritime training and skills in detail. The proposal for an international minimum wage is one that the ITF have wrestled with for decades and, if achievable at all, is likely to be far below the level of the UK NMW.
One proposal is, however, encouraging. It is that the UK, France, Denmark, the Netherlands, Ireland, and Germany should engage in discussions to institute a minimum wage for maritime workers on direct routes between these countries and to create ‘minimum wage corridors’. Such a minimum wage is likely to be above the low level of the UK NMW because these countries will be supportive of the idea of protecting their ferry services from undercutting by outfits like P&O Ferries.
A further aspect of this proposal is truly remarkable from a post-Thatcher Conservative government. It is that the Secretary of State Grant Shapps will be ‘asking unions and operators to agree a common level of seafarer protection on these routes’; in other words, routes between the countries listed above.
It seems strange but nonetheless welcome to hear a UK government give a favourable mention to sector-wide collective agreements, considering that for over forty years governments have effectively declared war on them. There remains a great deal of scepticism that the government will follow through meaningfully on these plans.
Collective bargaining coverage prior to the election of Mrs Thatcher in 1979 put the UK amongst the leading countries in Europe, with a coverage of about 85 percent of the workforce. This mostly reflected sectoral collective agreement coverage. From 1980 the extent of collective bargaining coverage has declined inexorably, to about 25 percent in Britain today.
Collective bargaining is now advocated globally as the antidote to inequality and falling levels of real pay, and hence demand in the economy, including by the OECD and even the IMF. Spain restored a law of sectoral collective agreements in December 2021 and the New Zealand government has promoted a bill to that end this year.
After forty-two years of anti-worker legislation in the UK, what unions really need is legislation guaranteeing legal space to organise and take action, protected from injunctions and damages claims. This must include solidarity action.
That is the way to rebalance power in the workplace and give workers the leverage to resist tactics like those of P&O. Without such a rebalancing, their scandalous actions will be seen by exploitative employers across the economy not as an aberration but as an example to be followed. Unfortunately, it seems unlikely that such legislation will be introduced anytime soon.