The P & O redundancies - it may have been unethical but was it illegal?
Published Mar 25, 2022
The sudden announcement via a pre-recorded video message to over 800 P & O employees that their jobs were redundant has stunned workers, surprised the nation and been declared a sin by the Archbishop of Canterbury. The employee contracts were terminated with immediate effect, and they were then replaced by foreign agency workers paid below the National Minimum Wage.
P & O stated that the redundancies were necessary to reduce costs and maintain the viability of the company, having lost £200 million in the last two years. But were the actions of P & O a breach of employment law and what might happen next?
Consultation
Employers are legally required to consult with employees when redundancies are being considered.
Where 100 or more employees are being made redundant there is a legal requirement to consult for a minimum of 45 days. P & O did not meet this requirement and acknowledged this by paying redundant employees an enhanced payment which they said was compensation for a failure to fulfil their consultation obligations.
With 100 or more potential redundancies an employer is also required to submit an HR1 form to the Redundancy Payments Service (RPS) at least 45 days before the first dismissal. It is unclear if P & O took this step. If they did fail to notify the RPS in time they will face an unlimited fine.
Negative publicity
The actions of P & O were headline news and the impact to the reputation of the business is likely to be impacted for a long time. The government reacted by announcing they will sanction the company by cancelling contracts with the business. There is also growing pressure on the company to repay government loans and the furlough money provided over the course of the Covid-19 pandemic.
The case shows us that even where money is no barrier to achieving company objectives the long-term impact to the brand of such a poorly managed process will have far reaching and long-term damage.
Planning redundancies
The case highlights the need to follow legal processes. By simply throwing money at a problem such as paying enhanced notice pay and redundancy pay in compensation for knowingly breaching employment law does not stop reputation damage from occurring.
When planning a redundancy process all of the stakeholders and their likely responses need to be considered and prepared for.
Undertaking redundancies can be one of the most challenging and stressful elements of managing a business. However, by knowing that you have done the right thing, adhered to the law and ensured the process and treatment of employees was fair, it should help mitigate the personal impact for your leaders and those that will lose their jobs.
If you are considering a restructure or redundancies, please contact your SSG HR consultant for guidance before starting the process.
Source: Gavin Parrott