800 employees sacked without notice - what’s the risk?

Recent news headlines suggest that P&O Ferries may be dismissing around 800 employees with immediate effect due to the business being “unsustainable” in its present form.

The unions are reported to be asking that the Secretary of State intervene and have advised their members to remain on board the ferries to protect their position.

What could employees in these circumstances potentially claim?

Notice

As a starting point employees are under statute entitled to minimum notice, one week per year of service up to a maximum of 12 weeks, the contracts of employment may provide for even longer notice periods.

From the limited information available so far it appears that the severance notices being served will include sums for “lack of advance notice” but that may not satisfy all their liabilities.

Fair reason for dismissal

There are likely to be claims for unfair dismissal too.

Employees with two years’ service or more are protected against unfair dismissal and whilst an employee who is no longer required due to a downturn in business may be fairly dismissed on the grounds of redundancy, an employer would need to follow a fair process which would include as a minimum advance warning and consultation.

Information and consultation obligations

Furthermore where more than 20 employees are being made redundant at one establishment there are statutory collective information and consultation obligations.

Those employees who face the threat of losing their jobs have a right to be collectively represented by a recognised union, or if there is none, an elected staff representative. Where this right is breached an application may be made to the Employment Tribunal for a ‘protective award’ of up to 90 day’s pay for each of the redundant employees.

Notification obligations

Where collective information and consultation obligations exist there is also the duty on the employer to give advanced notification of the redundancies to the Secretary of State.

Failing to comply with this statutory obligation is a criminal offence. The employer will be liable on summary conviction to a fine which is not subject to any limit. It may be of even greater concern to those in charge that the criminal proceedings may be taken against the individual directors who are responsible for making the redundancy decisions too.

Transfer of Undertakings (Protection of Employment)

One legal argument that may be raised is that there is not even a ‘redundancy’ situation where the work is being outsourced to a third party. Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 commonly known as TUPE employees are protected where there is a business transfer or a ‘service provision change’. This would include outsourcing provided that the new service provider would be carrying out fundamentally the same activities.

If TUPE does apply all the employees automatically transfer to the new service provider on their existing terms and conditions of employment. There are also similar obligations in relation to collective information and consultation in respect of a TUPE transfer as would apply in a large redundancy exercise and the penalties for failure are similar too. If the employees are dismissed because of a TUPE transfer it is deemed automatically unfair and any attempt to change the contractual terms will also be invalid if the transfer is the reason.

Injunctions

The unions may even be considering whether they can prevent the dismissals taking place by getting an injunction?

One union recently was successful in persuading a High Court to grant an injunction* that prevented the employer from carrying out the dismissals in a ‘fire and rehire’ situation. However that was a decision based on extreme facts and it would be unlikely that any injunction would be granted in the circumstances found here.

Clearly short-cutting a collective redundancy process can be costly given the claims that may be brought and the threat of criminal liability should also be a major concern. On a practical level there is also the risk that adverse publicity may damage that part of the business that remains going forward as the plight of so many losing their employment without warning will no doubt trigger headlines.

It has been suggested that special provisions relating to seafarer or mariners may apply here. Only time will tell when more information comes to light.

*USDAW and others v Tesco Stores Ltd [2022] EWHC 201