The mass scale dismissals carried out by P&O Ferries have led to a huge reaction from the general public, trade unions as well as the UK Government.  The company made a shock announcement to all 786 employees towards the end of March 2022, in which they confirmed – over a pre-recorded video address – that their employment would end with immediate effect.

The CEO has since confirmed that they carried out this dismissal knowingly that they were doing so unlawfully and went so far as to acknowledge that the trade unions would not have agreed to the company’s plans for making redundancies.

Damage to the company

Aside from the unlawfulness of their actions, P&O Ferries have suffered some what catastrophically from a public relations perspective. It has since been confirmed by the company, that to sufficiently compensate all 786 employees in exchange for them not pursuing legal action at tribunal amounts to £36 million. Cripes!

It has been further reported that forty employees are due to receive more than £100,000 in compensation, with some individuals receiving more than £170,000. However, it appears that not all those dismissed will be accepting a settlement agreement, as it has been reported that a chef who had over 20 years’ service with the company is claiming unfair dismissal, race discrimination and harassment.

Legal low-down on redundancies

Redundancy consultations can be complex, so we recommend you seek advice from your HR Optimisation consultant or obtain legal counsel if you intend to make any.  However, just to outline the basics for UK based dismissals:

Employers need to be able to show they have followed a fair procedure.  This includes exploring alternatives before redundancy, identifying the correct pool of those at risk, and ensuring selection is fair and objective.  Common mistakes include not being clear on what is being proposed, not having a sufficiently robust selection process, pre-judging the consultation process and failing to identify when or to follow through with collective consultation requirements.  I would argue P&O fell foul of most of these areas!

Individual consultation has no set time limit, but must be meaningful and effective irrespective of the number of employees at risk.

Collective consultation requirements kick in when you have 20 or more employees at risk of redundancy (this can be across different sites and timeframes).  These require minimum time limits of 30 (20-99 people) or 45 (100+ people) days before notice is to be served.  Businesses must also consult with elected representatives or trade unions when recognised.

Having a clear starting point for the process about what is exactly the situation faced by the business, what does it mean for the roles where individuals are at risk of redundancy?  From there identify the numbers at risk of redundancy, determine what form of consultation process is required, and strongly think through alternatives to redundancy (E.g., reduced hours as an alternative for example).  Plan accordingly but remain flexible depending on what arises during consultation.

What did P&O get wrong with their redundancy dismissals?

There are clear lessons from the P&O ‘disaster’ for other employers about how to conduct redundancy dismissals, especially collective redundancies.  Here are some of HR Optimisations highlights of top redundancy pitfalls for you to be aware of and how to avoid them:

1. Rushing the process

Often when a redundancy situation arises it can be tempting to just rush ‘to get through things’.  This increases the likelihood that an employer will make mistakes or miss opportunities to mitigate the impact of the redundancy (like failing to find out if staff would have accepted pay-cuts or flexible working).  P&O did state they familiarised themselves with the required process, but actively chose not to follow the correct collective consultation process due to a desire for haste and not believing it would have been meaningful – in hindsight a huge mistake.

2. Closing mind to alternatives

An employer often feels that redundancy is the only solution.  But is it really?  In the 2008 recession, employers were surprised how many people were willing to take pay-cuts or move to part time hours. In the Covid pandemic many staff were able to be furloughed to await the uplift in work again.  P&O failed to keep an open mind, staff are now waging that their roles were not in fact redundant, rather cheaper and less seafaring experienced workers were going to be hired to replace them.  They failed to consult with unions or keep an open mind to consider any alternative suggestions from Managers, advisors or the workforce.

3. Keeping unnecessary secrets

Many employers hold back information about their financial challenges.  Keeping people in the dark however is counter-productive because when bad news comes out of the blue it strikes like a steam train!  It always pays to be open, transparent and honest.  Make sure managers and your workforce receive information in a timely fashion.

4. Communicating poorly (or not at all)

P&O chose to inform their employees without warning, and in a pre-recorded communication address of instant dismissal – the approach and information was both unhelpful and unnecessarily distressing and the lack of even delivering the message live was felt to be cowardly.  It is crucial to think through comms – leaving a note on a noticeboard, or informing some teams before others, or waiting too long, may also be a recipe for disaster – it limits the time to discuss the situation, and information may get leaked, damaging trust.

5. Failing to consult

P&O chose not to consult at all – but more worryingly knowingly ignored the collective consultation regulations with both the unions and individuals, breaching the law.  Know the consultation rights of your employees and don’t try and circumvent this minimum required process if you wish to avoid legal claims.

6. Using unfair criteria

It is important to check that your selection criteria does not disadvantage those with protected characteristics e.g. be mindful of not disadvantaging those with care giving responsibilities or narrowing the pool to only furloughed workers if others are in comparable roles, they should be in the selection pool.

7. Being unclear about the payments

Give each employee in their individual consultation, a full breakdown of what redundancy pay they are entitled to, how the sum is calculated and details of how and when the payment would apply.  In some companies I have worked with they did not for example stipulate that redundancy monies were only available where the employee worked up to the termination date and did not take up employment elsewhere; leading to stress and resentment later on from an employee who wished to end notice 1 week early to commence onward work.

8. Only focusing on the present

P&O fell victim to only looking through the narrow lens of cost saving. They did not anticipate the mass exodus of other valued employees nor the PR damage and loss of revenue through customer boycotts.  Focus your energies on both carrying out a fair process and planning the future of the business, and the restructuring and welfare support of the remaining workforce of ‘survivors’.  Setting and agreeing reasonable objectives and workloads for remaining employees is important.

9. Ending the relationship badly

Redundancies are challenging and distressing situation for affected employees.  Operating from a place of trust, respect and dignity is important. End employment relationships as positively as possible. Think about your employer brand.  One bad review on Glassdoor might be enough to ward off future hires – a PR disaster such as P&O may be enough for brand trust to be eroded from customers too.

10. Failing to set managers up for success

Untrained, busy, unsupported managers are likely to make a bad situation worse.  It is important that managers are trained to understand the redundancy process, how to handle consultations and meanifully consider alternative suggestions, and how to hold challenging conversations.  They also need looking after with respect to their own mental wellbeing through such processes.

If your business finds itself needing to plan for a restructure, please reach out nice and early for support, guidance, templates, script suggestions, or even outsourced process delivery to hello@HROptimisation.co.uk we are well versed in individual, small team and whole org restructures in the UK and internationally and can support accordingly.