Does the P&O Ferries case fall under the employment laws of Scotland, England or Wales?

P&O Ferries have made headlines after it was reported that they terminated the employment of 800 workers with immediate effect via a video call.

With no prior warning or consultation, staff were sent an email invitation to attend a virtual meeting, at which a company spokesperson informed staff that was to be their last day of employment. The reporting varies, but in essence, it would appear that P&O staff, who were all seafarers and worked on various P&O ships that travelled to and from various ports in the UK, were being dismissed, being offered compensation packages and to then be replaced by lower paid agency workers.

Various reports and commentators have criticised the actions of P&O, for various reasons, including supposed non-compliance with the law relating to termination of employment.

What does the law say?

Employees subject to employment law within Scotland, or England and Wales, with two or more years’ service, are protected from unfair dismissal.  If dismissed by reason of redundancy then the individual ought to have the right to a statutory redundancy payment (again if they have two or more years’ service), the application of a fair redundancy procedure and some time off work to look for alternative employment, all as outlined in the Employment Rights Act 1996.

Furthermore, under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), there is a statutory duty to inform and consult with staff and recognised trade unions where 20 or more employees are proposed to be ‘dismissed as redundant’ within any period of 90 days or less at any one establishment.

In this context alone, TULRCA defines ‘dismiss as redundant’ as a dismissal for any reason not related to the individual concerned. A business reorganisation, like the current P&O restructure, could fall within this definition and therefore trigger the statutory duty.  The penalties for failing to comply with this requirement can be severe, with all affected employees able to claim a protective award of up to 90 days’ pay and possibly also criminal prosecution and sanction for any company director who wilfully ignores or dispenses with the requirements of TULRCA.

This duty to consult is required where the employer is ‘contemplating collective redundancies’. Redundancy can be a fair reason for dismissal, but if the employer does not follow a fair procedure there is scope to argue that the dismissal is unfair. In addition, there is the question of whether or not the employees have any notice pay and what their entitlement to notice pay is.

It is understood that there are reports to say that P&O’s offer to staff was to provide exit packages and compensate staff for the loss of their income with compensation above statutory levels.  Again derived from reporting, there is a suggestion that P&O’s actions were driven to reduce their overall wage bill and costs, with the possibility of far cheaper labour being sourced and brought in to operate the ships in question, due to a number of pandemic-hit trading years.

But surely P&O would not have been so gung-ho and swashbuckling in their approach to employment law applicable to the various staff impacted by their actions?  To begin to explore this further, it must be noted that reports suggest that although the staff impacted by the announcement are all UK- resident, those staff impacted were engaged by a Jersey-based agency and the ships in which they sailed to various locations, were owned and operated by a foreign entity, with no UK-connection.  P&O, it seems, is taking the stance that the people impacted were “seafarers” who were not subject to the employment laws of Scotland, England & Wales.

Are there any special rules in respect of maritime law?

Under maritime law, the “flag” of a ship represents that ship’s nationality and therefore, for many purposes, the laws that the ship is subject to.

This has led to the practice of ‘Flags of Convenience’ where ships register in countries that have less restrictive rules and regulations to seek to have more flexible working practices.

In the current P&O Ferries dispute, an important factor when considering the legal issues and any action that may be taken against the company is where such claims can be brought and heard; the question of what courts have jurisdiction and what laws can apply will be the primary question to address, to determine if the seafarers have any right of recourse against P&O or any of its connected entities. This is particularly significant given that seafarers often have contracts governed by different countries and work on ships flying under the flag of shipping-friendly locations.

Comment

Whether the employment tribunals in Scotland, England & Wales, may hear cases arising from the P&O Ferries dispute will ultimately depend on whether it is found that there is a “sufficient connection” to a legal jurisdiction within the UK to allow jurisdiction to be established, so as to allow a UK tribunal to hear the case and also then apply the laws of that jurisdiction to any given case.  There are a number of unknowns about the contracts that the P&O staff worked under and whether or not the contracts themselves had any link to the UK; contracts may say they are to be construed and interpreted with the laws of a particular country, but of itself that would not provide a court with jurisdiction (the right to hear the case) or to apply acts such as the Employment Rights Act or TULRCA.

There have been some recent cases in the UK where possibly surprising results have been reached, with this “sufficient connection” having been established for the purpose of pursuing litigation.

Although not an Employment Tribunal claim, a recent case that catches the eye involved Kenyan workers.  A Scottish judge ruled in favour of hundreds of Kenyan farmworkers to allow them to take legal action against one of the world’s biggest tea producers, the Scots-based “Finlays”, a company which was founded in Scotland in the 18th century and has had its base in Scotland ever since.  The claims regarding poor conditions on tea farms in Kenya will be heard in the Court of Session in Edinburgh and, if successful, may result in considerable damages for the Kenyan workers.

It is possible that any UK resident P&O worker who rejects the attempt by P&O to compromise and settle any dispute as to their termination of employment with an exit package, will at least, have the ability to argue a sufficient connection to the UK even where the ship they worked on is registered elsewhere and even where their contract is said to be governed by a foreign jurisdiction.  Whether this will transpire and whether any P&O worker will succeed in their arguments, very much remains to be seen.  It may be that if disputes are launched in the Employment Tribunals in Scotland, England & Wales, the regular embarkation and disembarkation from a UK port, coupled with UK tax status, together with strong policy reasons, may give an Employment Tribunal a temptation to establish jurisdiction.  If so, P&O may face significant difficulties once the facts are scrutinised.

For further advice on any of these or connected issues, please contact one of our specialist employment lawyers, who will be pleased to assist.