UK ministers conceded on Thursday that the government might have no means of legal redress against P&O Ferries even though its chief executive admitted to MPs that the company broke the law by sacking its entire British crew last week without notice.
The admissions came after Boris Johnson told parliament on Wednesday that the government would take the ferry operator to court. The prime minister said P&O could face “fines running into millions of pounds” for failing to notify authorities of plans to halve its labour costs by replacing crews with agency staff on an average hourly rate of £5.50.
Johnson also promised to take steps to ensure all mariners working in British waters received the statutory minimum wage, whose main rate will rise to £9.50 an hour from April.
But two ministers who gave evidence to MPs on Thursday said it was not clear whether the government would be able to penalise P&O, even though the company was effectively buying its way out of its legal obligation to consult unions and the staff affected.
“We are considering any options that are open to us,” transport minister Robert Courts said. “We have to investigate properly, we have to understand what the position is and what our legal powers are and then if there is something that is open to we will look to do it.”
Under UK law, failing to notify the Insolvency Service in advance of launching a collective redundancy process is a criminal offence subject to unlimited penalties.
But it is not clear whether these penalties apply in the maritime sector, where the employer’s obligation is instead to notify authorities in the countries where its ships are registered. In P&O’s case these are Cyprus, which requires 45 days notice, and Bermuda and the Bahamas, which set a 30 day deadline.
Peter Hebblethwaite, P&O’s chief executive, told the transport committee that the company had not breached that law — although P&O has said it notified the relevant authorities only on March 17, the same day it sacked its crew.
Hebblethwaite admitted, however, that P&O had chosen not to consult on the 800 redundancies — a breach that would leave it open to paying “protective awards” of 90 days pay, on top of redundancy payouts, if taken to a tribunal.
P&O has effectively offered to pay this upfront, as part of a redundancy package more generous than the statutory minimum, while also setting a deadline for staff to accept — making it unlikely that crew members would want to run the risk of pursuing legal action.
Paul Scully, small business minister, said his department had asked the Insolvency Service to “look deeper into the jurisdictional issues” around P&O’s failure to notify the authorities promptly.
He added that, as it was “a complex set of situations”, he had also asked them to look at the liability P&O’s directors might have as individuals if they did not act in a fit and proper manner; and whether there was any possibility of taking action against the company for discrimination between staff of different nationalities.
However, officials have found no means of taking immediate court action to prevent the redundancies — and P&O’s apparent impunity has placed the government under intense pressure both to plug gaps in UK employment rights and to ensure that the existing rules are enforced.
Frances O’Grady, general secretary of the TUC, has called the P&O case a “watershed moment” for workers rights in Britain. She urged the government to prosecute the company and its directors, suspend its freeports contracts with its owner DP World and bring forward a much-delayed employment bill, including measures to “stop companies firing employees at will”.
Scully and Courts confirmed that the government would present a package of measures to parliament next week, intended to prevent similar situations occurring in future.
One gap Scully wants to plug is to ensure that the government is able to prosecute and impose penalties if a maritime employer fails to notify any relevant authorities of planned redundancies with due notice.
Another measure could be to clarify or extend the application of the UK’s minimum wage: legislation passed in 2020 extended the wage floor to all seafarers working wholly in UK waters, but there was an exemption covering staff on ferry routes between the UK and the rest of Europe.
There is also the question of whether the penalties a tribunal can impose on a company that fails to consult on a collective redundancy should be increased, or left uncapped.
However, ministers’ comments suggested the package was likely to fall short of the broader strengthening of worker protections that unions have demanded.
Scully rejected parallels between P&O’s actions and previous cases of “fire and rehire”, saying that while such tactics were controversial, there were examples where they had been used through a proper consultation process and had “saved jobs, albeit on different conditions”.
He argued that the UK needed to protect workers against “callous mass sacking” but also to maintain a “flexible labour market” that had helped the country create jobs and draw in investment. He added that while the government was reviewing its involvement with P&O, schemes [such as freeports] had “ramifications” for the government’s levelling up agenda and for its ability to protect inward investment.
Any move to ban or restrain “fire and rehire” — where a business seeks to change workers’ terms and conditions, with a threat of job losses if there is no agreement — would worry UK business leaders, who have argued that such changes are sometimes essential for a business to remain viable.
Andrew Burns, a QC focused on employment law, told MPs that P&O’s actions were exceptional and that employers generally thought “long and hard” before resorting to fire and rehire tactics, which were subject to legal tests.
Tony Danker, director-general of the CBI business group, said P&O’s workers had been treated “abysmally” — but added: “You can’t legislate for those companies who choose to wilfully ignore or break the rules.”
