There is widespread disbelief at the turnaround of dismissals at P&O Ferries yesterday, with reports suggesting that 800 of the firm’s employees are to be replaced with agency workers.
We do not know the full circumstances as yet, but many organisations will be wondering how this aligns with an employer’s duty to collectively consult in largescale redundancy situations – which apply when 20 or more redundancy dismissals are proposed at one establishment within a 90 day period.
Where the obligation to collectively consult is triggered, the employer is required to consult with appropriate representatives of the affected employees – with a view to reaching agreement. Consultation must start ‘in good time’ and for a minimum period of 30 days (where between 20 and 99 employees are to be dismissed), or 45 days (where 100 or more employees are to be dismissed). There are very limited exceptions where the employer can show that ‘special circumstances’ make consultation not reasonably practicable.
This ‘special circumstances’ principle is narrowly interpreted by tribunals and applies only in exceptional cases. Insolvency (or risk of insolvency) of the employer does not necessarily amount to special circumstances. Even if special circumstances do exist, the employer will not benefit from the exception unless they have conducted whatever level of consultation was reasonably practicable in the circumstances.
The costs of getting it wrong can be very high. Not only will qualifying employees have grounds to claim unfair dismissal, but there is a special ‘protective award’ of up to 90 days actual gross pay – per affected employee. The purpose of this protective award is punitive i.e. to punish the employer for their failings, rather than to compensate the individual employee for their losses.
Employers also risk fines and other potential sanctions if they fail to notify BEIS of the proposed redundancies using Form HR1. As the situation with P&O Ferries and their trade union unfolds, we’ll be watching closely.
The above is a timely reminder for any employers who have potential largescale redundancy dismissals on their horizons.
