It’s fair to say that the recent sacking of 800 staff by P&O Ferries was absolutely shocking and a poor reflection on the Dubai-owned business.
The staff were informed on a Zoom call that the 17th of March was their final day of employment with immediate effect, without warning was given on a pre-recorded call lasting a few minutes. To compensate for the lack of notice, P&O Ferries is giving workers an ‘enhanced compensation package’ subject to them signing a settlement agreement by 31 March and complying in full with its terms and conditions. In addition, P&O is providing support for those affected to get a new job at sea or ashore, as well as confidential support including counselling through its employment assistance programme until June.
The staff are going to be replaced with cheaper agency workers in a move to make cost savings, with P&O stating it was a tough decision and without these changes the business was not viable. The agency staff were already on board ready to take over and there were reports of workers being escorted off their ships by security with handcuffs, adding to the demeaning way the staff were treated. The parliamentary under-secretary for transport, Robert Courts, regarded this as insensitive and wholly unacceptable, with the RMT union referring to it as one of the most shameful acts in the history of British industrial relations.
No doubt the pandemic had affected the business, so had this occurred during the period of the lockdown, it would have perhaps been easier to understand, but with restrictions easing and travel resuming it is difficult to understand the timing of this decision. Normally, if an employer wishes to make more than 100 staff redundant, it is required to give 45 days’ notice, which does not appear to have happened in this instance. Typically, staff should be warned they are at risk of redundancy and have a formal consultation process wherein alternatives to dismissal are explored. This may still lead to the same end result, but at least there is more time for staff to prepare and for the employer to evaluate all the options.
P&O reported it was making a £100m loss year on year, so perhaps job losses were unavoidable. However, failing to consult employees in a redundancy situation could mean any redundancies are almost certainly going to be regarded as unfair, should workers pursue a claim at an employment tribunal. The approach taken by P&O Ferries is certainly ill advised, not just with regards to the impact on the staff being dismissed, but it also sends a message to the remaining staff that they are disposable. Morale among the ‘survivors’ is likely to be low, which is going to affect their service to customers who are also likely to have their doubts about who they should book with. The reputation of the business is going to be damaged and no doubt its marketing team will be focusing on damage control.
P&O is a classic case study of what not to do when considering redundancies and this action potentially will leave it adrift at sea.
Getting your Redundancy Selection Criteria right
Employers must consider a number of issues if they are to carry out a fair and transparent redundancy process. One of these is the selection criteria used to score employees and to decide who are to be made redundant. Unfairly devised or applied selection criteria can result in various employment claims, including unfair dismissal and discrimination. Selection is one of the main areas that employees challenge when made redundant.
Employment tribunals do not commonly question the particular criteria chosen, but they are more likely to have a view on how scoring has been applied. It is, therefore, vital for employers to be clear about what criteria they will measure against and how employees will be scored.
One misconception is that to be fair, selection criteria must always be objective. That is not the case. Objective criteria, such as disciplinary record, skills and experience, are generally preferable because they are easier to measure. However, there is more acknowledgement that employers might need to exercise personal judgement to make decisions.
Subjective criteria, such as employees’ attitude and flexibility, have historically been deemed areas to avoid. However, subjective criteria like these can be applied if caution is exercised. Where selection criteria are difficult to measure, justify and are open to interpretation, employers should ensure they are clear about what the criteria consist of and how scores will be applied to them.
For example, if employers score ‘attitude’ they should clearly explain what aspects of an employee’s attitude will be measured, particularly because this is likely to be viewed differently by different people, and ensure they provide evidence to support their scoring. Ultimately, the clearer an employer can be, whether criteria are objective or subjective, the less chance there is of employees successfully challenging this at tribunal.
Absence of proof
The application of absence-related criteria is a key problem area when scoring in a redundancy exercise. Although it is acceptable to consider absence records when scoring employees, there are some important considerations and risk areas, such as whether the employee is disabled and what adjustments need to be made to scoring.
Failure to be alert to this can result in discriminatory selection criteria being applied. Employers need to be aware that any maternity or family absence must be ignored, while reasonable adjustments to scoring, i.e., discounting absence, will need to be made for disabled employees. If employers score sickness absence, then it is advisable to apply a long enough period over which the absence can reasonably be measured so that a complete picture can be gained, particularly where longer-serving employees with historically good absence records are involved and take into account any adjustments.
What about selection based on costs to the business? In theory, employers can dismiss their most expensive employees. However, this is not without issues, and it should not be applied in isolation as this often results in employers losing highly skilled workers or dismissing those with lower redundancy payments. The latter are likely to have shorter lengths of service so may be a form of the traditional ‘last in first out’ approach, which should not be used.
There are also risks of this resulting in age discrimination claims because it tends to be the case that the most expensive workers are older.
There is a lot to consider when choosing and applying selection criteria and it is a part of the redundancy process that is often scrutinised at tribunal. However, as long as employers have acted reasonably, with a clear understanding of what they are scoring and how, they will be in a stronger position to defend against any challenge.