A snap legislative change to isolate P&O exposes the holes of employment law
First came the heavy-handed sacking of 800 workers via Zoom. Then followed the unnerving performance of P&O chief exec Peter Hebblethwaite in front of a parliamentary select committee. The P&O saga has been a total mishap. Now, Transport Secretary Grant Shapps has vowed to change the laws and make it illegal to pay employees below minimum wage in international waters for all ferry companies operating from UK ports. P&O sacked its seafarers to replace them with agency workers that could be paid as little as £5.15 per hour, by Hebblethwaite’s own admission.
Many have applauded Shapps’ plans to close this loophole – and they’re right to. If companies are able to cut corners, they will do so in an attempt to keep costs down. It is up to governments to bring in legal change, rather than businesses to anticipate it, even if it is in their interests to continually look to the future. But we shouldn’t ignore the fact it comes only after a scandal and the accompanying brouhaha. This has always been the problem with reactive policymaking, and one that has persistently plagued this government. Legislating only in the wake of a bad outcome is no way of running a country; the law is not there to fix things, but to deter and avoid episodes like this from happening in the first place.
Ministers are worried if the law is not changed, P&O’s decision will cause a domino effect, with other companies following suit to stay competitive. But P&O’s behaviour can be explained by a legal environment that has allowed questionable loopholes and practices such as fire and rehire to flourish. New laws will be specifically targeted at seafarers working in international waters. If and when they come through, they might bring some relief to workers in a largely inequitable industry. But the problem is more widespread than just on the high seas.
Often, employers will happily break employment law with the proviso they’re prepared to pay the compensation for it, according to Richard Woodman, an employment lawyer at Royds Withy King. To put it simply, employers regularly sack people and pay them off. The approach is common in financial services, in particular with the bulge bracket investment banks, according to Tom McLaughlin, an employment lawyer at BDBF. Banks rarely conduct a full redundancy consultation process; they often put employees “at risk” of redundancy and then offer a settlement agreement. P&O is not an isolated case; the reason why we find it shocking is because it was done so brazenly, without any notice or appropriate consultation with the unions.
Workers have their unions and their employment tribunals. But neither have a great record of reinstating employees in their jobs. The three outcomes available are reinstatement, reengagement or financial compensation. Some people would want the latter, but for those who want their old job back there are strict feasibility tests to be met. This leaves space for the employer to simply argue that the bond of trust between employer and employee has been breached, and that a professional relationship would be impossible to reinstate. In other words, it gets employers off the hook.
The problem with the P&O case, then, goes well beyond the issue of minimum wage. It’s worth asking ourselves whether employment law, which can be broken so easily without fear of repercussions, is good enough law to begin with. You don’t have to have worked at P&O to know that the answer is that it’s not.