P&O Ferries sackings prompt push to plug UK employment law loopholes

Grant Shapps, transport secretary, will on Wednesday set out plans to plug loopholes in UK employment law exposed by P&O Ferries’ decision to sack 800 workers without any formal consultation.

Shapps will set out his plans in a House of Commons statement, including new laws to require any company operating out of British ports to pay the UK minimum wage, whose standard rate will rise to £9.50 on April 1.

Meanwhile, the government has said it will produce a new statutory code on the practice of “fire and rehire”, with ministers admitting that the P&O scandal exposed the need for more clarity on the rules for worker consultations.

P&O Ferries on Tuesday rejected Shapps’s plea to the company to reinstate the 800 workers. Peter Hebblethwaite, chief executive, told the secretary of state: “Complying with your request would deliberately cause the company’s collapse, resulting in the irretrievable loss of 2,200 jobs.”

Paul Scully, business minister, announced on Tuesday a new statutory code to clamp down on controversial “fire and rehire” tactics used by employers who failed to engage in meaningful consultations with staff.

The practice refers to cases where an employer dismisses a worker and takes them on again but on new, less favourable terms. P&O’s actions put a spotlight on existing rules, even if the company had no intention of rehiring staff.

Scully said the new code would “tighten the screw on unscrupulous employers”, by detailing practical steps that employers should take when consulting on proposed changes to employment terms.

A court would take this into account when considering cases of unfair dismissal, and could apply an uplift worth 25 per cent of an employee’s compensation if employers failed to comply with the code.

“The government recognises the need for greater clarity for employers,” a business department spokesman said, referring to the confusion around the rules in the wake of the P&O sackings.

But Angela Rayner, Labour’s deputy leader, said the move was “too little, too late” and would not do enough to stop other unscrupulous employers following P&O’s lead.

“We have already seen that a few extra pennies in compensation is a price rogue bosses will pay on the way to vastly greater profits,” she said. Rayner said there should be a full change in the law.

“Today’s announcement leaves more questions than answers, and falls woefully short of stopping the scandal of fire and rehire altogether,” she said.

Alan Bogg, professor of labour law at Bristol university, said the 25 per cent uplift to compensation “would not have a strong deterrent effect”, because awards for unfair dismissal tended to be low in cases involving redundancies.

Darren Newman, a specialist in employment law, also said the new code appeared to be a “performative” move on the part of ministers, and would not be a big change unless it led courts to take a tougher view of when dismissals could be justified on business grounds.

Among the measures expected to be announced by Shapps is a move to ensure that the government can prosecute and impose penalties if a maritime employer fails to notify relevant authorities of planned redundancies with due notice.

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.