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P&O Ferries: how some companies can afford to break the law

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A week after 800 P&O Ferries workers lost their jobs without notice, the company’s chief executive is now facing calls to lose his. Peter Hebblethwaite is under pressure from the UK government to resign after admitting the company had broken the law.

Asked about the video call sacking its employees, Hebblethwaite said P&O had decided not to engage with unions ahead of the move, in breach of UK labor law. He told a parliamentary hearing: “There is absolutely no question that we were obliged to consult with the unions. We chose not to do that.”

He added: “Our assessment was that […] no union could accept our proposals”.

The hearing seemed awkward for the CEO, who said he was trying to save the business and would make the same decision again. The MPs did not hold back, and business committee chairman Darren Jones asked him: “Are you in this mess because you don’t know what you’re doing, or are you just a shameless criminal?”

Another MP described recent events as a “story of corporate bullying where a large company thinks it can break the law with impunity”.

For its part, P&O claims the company could not continue without the mass redundancies and says workers are receiving generous severance packages, at least £15,000, to compensate for breaching regulations.

Currently, individual workers fired without notice could use the labor law claim for up to 90 days of pay. This cap allowed P&O to calculate in advance how much it could pay and then offer higher compensation deals, making it harder for laid-off employees to turn down the offer.

Sure enough then, the company apparently chose to engage in what is known as an “efficient breach” of the rules. It turned out that fulfilling their legal obligations to employees to participate in a consultation process was more expensive than paying settlements. The danger is that without statutory reform, as one of the hearing witnesses asks, rich companies may simply choose to buy themselves out of the legal system in the same way.

Another danger lies in the fact that non-disclosure agreements (NDAs) are included in severance agreements offered to terminated P&O employees. These agreements prevent them from taking further legal action against their former employer or sharing confidential information.

The use of NDAs in the UK, also known as “confidentiality clauses” or “gag orders”, has previously been criticized in relation to various issues, including sexual harassment, racial discrimination and assault.

Sunken wages

International workers replacing laid-off British staff, doing demanding jobs keeping passengers safe, are expected to receive an average salary of £5.50 to £6 an hour. P&O argues that these rates are in line with international shipping standards, but are much lower than the UK national minimum wage, which from 1 April 2022 will be £9.50 per hour for those over 23. .

Calls to end nationality-based pay discrimination, where companies pay non-UK workers less than their British colleagues, in the shipping industry are nothing new. But the P&O case shows that any attempt to solve the problem has had little impact.

P&O estimates that using agency workers will cost about half what they used to spend on employees. They also argue that it replicates the model adopted by competitors, highlighting the dire implications of a global downward wage spiral.

Meanwhile, the 800 who lost their jobs last week can take comfort in the backlash that has been launched against P&O. There have been calls for the government to ban their boats and even confiscate the boats. Transport Secretary Grant Shapps accused Hebblethwaite of “stunning arrogance” and said measures would be tabled in parliament next week that would seek to force P&O to reinstate staff or pay new workers the national minimum wage.

Read more: P&O: 800 employee redundancies show how precarious UK jobs can be

P&O must also be careful about that other essential element of a successful business model: customers. In recent years, many companies have been desperately trying to convince consumers that they are moving away from profits and shareholders toward an approach that prioritizes social responsibility.

The firing of 800 workers, many via video link, could easily lead to a boycott and serious reputational damage. P&O may have avoided financial bankruptcy for now, but if passengers consider the company morally bankrupt, stormy waters lie ahead.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Emma Sara Hughes does not work for, consult with, own stock in, or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond her academic position.

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