The decision of DP World, the Dubai-based owner of P&O Ferries, to dismiss 786 of its workers in March without notice has shone a spotlight on the enforceability of UK employment laws.
Trade Union and Labour Relations (Consolidation) Act (TULR(C)A) 1992 s188 provides that where an employer is proposing to dismiss 20 or more employees at one establishment, it must consult with employee representatives, normally trade union reps. Appearing before the House of Commons Transport and Business, Energy and Industrial Strategy Committees
on 24 March 2022, Peter Hebblethwaite, the CEO of P&O Ferries, said: ‘There is absolutely no doubt that we were required to consult with the unions. We chose not to do so.’
As is almost always the case in employment law, the chief responsibility for enforcing the law rests with the individual employee. Where an employer has failed to consult, an employee may commence proceedings in the employment tribunal (ET) for a protective award, but that award cannot exceed 90 days’ pay.
As Hebblethwaite explained to MPs, it was DP World’s intention to dismiss all its staff who were on salaries of £36,000 a year and replace them with employees paid £5.50 an hour. The laws incentivised the company to dismiss its employees because the profit it would make from cutting wages would dwarf the loss of paying the protective award.
Behind the treatment of the P&O employees lies the much bigger story of how to enforce employment laws. When ET fees were introduced in 2013, research for the Department for Business, Innovation & Skills found that a third of ET awards were never paid at all and a further sixth were only paid in part.1Payment of tribunal awards, 2013 study, Department for Business, Innovation & Skills, 2013.
Research funded by Citizens Advice in 2014 confirmed this picture, showing that even when awards were paid, employers often delayed for months before payment.2Emily Rose et al, Enforcement of employment tribunal awards, Universities of Strathclyde and Bristol, December 2014.
Some of this non-compliance reflects a broader phenomenon in which certain businesses and rich individuals feel themselves above the law. What is specific to employment law is a series of asymmetries whose combined effect is to place the burden of litigation more significantly on the worker. Employees are expected to comply punctiliously with the tribunal’s orders. For example, if they submit a claim outside the principal time limits, the tribunal is rarely forgiving. A defaulting employee will have their claim struck out. By contrast, an employer who submits a defence late is almost never barred from defending.
Although reinstatement is, in principle, one of the primary remedies for a finding of unfair dismissal, fewer than a dozen reinstatement orders are made each year, out of tens of thousands of claims across the tribunal system as a whole. Where an employer ignores such an order, the only remedy is an increased financial sanction.
The punishments for employers are always money, but in a world where the gap between incomes and profits is growing, it becomes ever easier for employers to tolerate a modest penalty, knowing that the profits will outweigh any real consequences of sanction. DP World is a giant multinational business, with revenues of over $10bn a year. What could it care if a judgment requires it to pay its dismissed workers just 90 days’ pay?
Transport secretary Grant Shapps announced a plan to prevent any repetition of the incident. Depressingly, at the core of this plan was a suggestion that HM Revenue and Customs should check that UK ferry operations were paying the national minimum wage. But that is something that it should already have been doing as part of its normal duties.
More ambitiously, Keith Ewing, president of the Institute of Employment Rights, has proposed
that employers should be stopped from making redundancies until consultation duties have been complied with. He proposes that workers should be able to apply to the Central Arbitration Committee for a cease-and-desist order, enforceable as an injunction, but without the formality or cost of High Court proceedings. This would be a genuinely progressive step – but assumes that MPs have the political will to act rather than merely feign surprise and outrage.
The unions in the P&O case have been provided, unusually, with a further route for enforcement. Where an employer is dismissing 100 or more employees at one establishment, it must also inform the secretary of state (TULR(C)A s193). A failure to notify can make the business (or any of its officers, including managers and directors) liable for a criminal prosecution and a fine.
The Insolvency Service is considering whether to prosecute under that legislation. Boris Johnson has told parliament
: ‘We will take them to court, we will defend the rights of British workers … P&O plainly aren’t going to get away with it.’ It remains to be seen whether action will be taken, or whether the P&O workers’ treatment can be added to the government’s long list of promises made and then ignored.