Fire and Replace NOT Fire and Rehire. What is to be done.
By Professor Keith Ewing, professor of public law and Kings College, London and President of the Campaign For Trade Union Freedom

Professor Keith Ewing

Grant Shapps’ nine-point plan in response to the P&O affair has been widely criticised as falling well short of what is required to deal not only with the ongoing dispute, but also with its legacy to ensure that this does not happen again. Yet despite the feigned surprise and faux outrage of the political classes, P&O is not a one off problem, any more than were the other recent corporate scandals. It is a consequence of the systemic weaknesses of British labour law, which need to be addressed. So what needs to be done?

First, the Shapps’ plan does nothing to deal with the problem of information and consultation. The announcement by the Insolvency Service that a criminal investigation is underway into the recent redundancies at P&O makes it premature to propose that the criminal law needs to be modified. Let’s wait and see. And let’s wait and see if the law needs to change on directors’ personal liability. What is clear, however, is that the duty to inform and consult employee representatives needs to change.

It is now widely accepted across the political spectrum that employers should be stopped from making redundancies until consultation duties have been complied with. There are obvious reasons for such a restriction. There is also an obvious solution: it should be open to employee representatives, as well as a government agency (as some have proposed), to apply to the High Court for an injunction to restrain redundancy dismissals until such time as consultation has taken place.

It should also be open in the alternative for employee representatives to apply to the CAC for an order to restrain such dismissals: the High Court is not an accessible forum for those without means. A CAC cease and desist order could be registered in the High Court; failure to comply with the CAC order would be punishable as a contempt of court in the normal way. There is also a case for giving government the power to stop dismissals from taking place where the employer has failed to provide sufficient justification.

Secondly, the proposal to extend the statutory minimum wage to British ferries, while welcome, does not address the problem exposed by the P&O affair. Nor is it enough if the government’s aim is to ensure that British seafarers are to receive ‘fair pay’: the ‘minimum wage’ is not by any stretch a ‘fair wage’. The Achilles heel here is the global supply of workers available to work at substandard rates in substandard conditions, enabling employers to import workers to do jobs that cannot be exported.

The aim should be to insist not on the ‘minimum wage’, but on the ‘prevailing wage’. The practice of ‘fire and replace’ will be stopped only if the employer is required to pay the replacement workers the same as those workers they have replaced. This may require an overhaul of the TUPE regulations if necessary (now possible that we have have left the EU); better still, it would require a return to sectoral collective bargaining in the ferry (and in other sectors) to set minimum wage rates for the industry as a whole.

In other words, the problem of ‘fire and replace’ will be resolved only if we remove the opportunity and incentive for employers to use it. This can only be done by ensuring that the identity of the employer is irrelevant for pay purposes: regardless of whether a worker is directly employed by an employer or supplied to the employer by an employment agency or labour supply company, there is a rate for the job determined in negotiations with a trade union that applies to everyone. All should be paid the same rate for the same job.

Thirdly, the government’s plan to privatise enforcement of the minimum wage by the British Ports’ Association appears from media reports to have been rejected by port industry representatives. In that case, there is surely an additional option: restore the power of trade unions to enforce labour standards. This could be done quite easily by repealing what was openly acknowledged at the time as anti-ITF legislation when it was introduced by the Conservative government in 1982.

The legislation in question removes legal protection from ITF enforcement action, by denying protection for disputes between trade unions (such as the ITF) and employers (such as P&O). There would also have to be tweaks to the notice and balloting rules. This would then enable the ITF to boycott any offending vessel. Along with appropriate changes to the law of secondary action (changes in any event mandated by international law), other port workers would be empowered to support the ITF until the dispute was resolved.

In the recent past, it is conceivable that any such action could have been blocked by the European Court of Justice’s decision in the Viking case, on the ground that such action violated the EU principle of freedom of movement. But now that we are ‘free’ from EU law, there is an opportunity for the government to cut loose from these restraints. It is bizarre that Rotterdam dockers are currently permitted to take action against P&O which British workers are not.

Fourthly, there is the question of ‘fire and rehire’, dealing with which is necessary if employers discouraged from using ‘fire and replace’, impose inferior conditions on existing staff instead. But it is not clear how the government’s proposal to ensure ‘fair, transparent and meaningful consultations on proposed changes to employment terms’ will help. We already have requirements for ‘fair, transparent and meaningful consultations’ arising under both collective redundancy law and unfair dismissal law in relation to redundancy.

The ‘fire and rehire’ problem is a different problem and needs a different solution. In fact, there are two problems. So while there is already an obligation under collective redundancy law to consult about ‘fire and rehire’, the first problem is that the consultation occurs too late to be effective. Consultation needs to take place before the employer formulates proposals to vary contractual terms, to explore other ways to deal with any economic difficulties faced by the business. Cue Barry Gardiner’s private member’s bill.

The other problem also addressed by Barry Gardiner’s Bill is the fact that an employee fired for refusing to accept unilaterally imposed terms will be regarded as having been fairly dismissed. The government’s proposal thus misses the point. What is needed is a change to the legislation (and the case law thereunder) that currently enables employers to dismiss workers without redress. Legislation is needed to make clear that it is not a fair dismissal where an employee is fired for refusing to accept a unilateral variation of contract.

Finally, it is all the more remarkable that we should be discussing these problems this year, the year of the 50th anniversary of unfair dismissal law being introduced. Yet here we are faced with another example of the law’s futility, in the case of P&O not ‘fire and rehire’ as in my view it is wrongly characterised, but ‘fire and replace’. The latter is perhaps the most extreme symptom so far of unconstrained employer power, which has been evident in multiple bad practices for many years, encouraged by a legal regime which is ultimately the responsibility of governments which only radical steps will reverse.

Further articles

Criminal and Civil Investigations Launched Into P&O Sackings
Edited from The Guardian

Criminal and civil investigations have been launched into the conduct of P&O Ferries after the operator summarily sacked nearly 800 crew without notice or consultation.

The Insolvency Service said it had “initiated both formal criminal and civil investigations” into the circumstances of the redundancies, after making inquiries at the request of the government.

The move was confirmed in a letter to the business secretary, Kwasi Kwarteng, who tweeted that he and the transport secretary, Grant Shapps, would “continue to follow this matter closely as the investigations progress”.

The announcement comes after Transport minister Grant Shapps appeared to admit court action would not be taken by the government, backtracking on an earlier statement by Boris Johnson.

The move will be welcomed by MPs on all sides who had urged the government not to let P&O escape without sanction for choosing to break the law.

The P&O Ferries chief executive, Peter Hebblethwaite, admitted last week in an extraordinary House Of Commons hearing that there was “absolutely no doubt we were required to consult with the unions … We chose not to do that.”

The firm laid off 786 crew on British contracts issued out of Jersey, telling them that they were being replaced by cheap agency workers with immediate effect, and imposing a deadline for them to accept a compensation payoff while forfeiting the right to legal action. All but one of the sacked crew had accepted by yesterday’s deadline.

A spokesperson for the business department said on April 1st: “Today the Insolvency Service has confirmed it has commenced formal criminal and civil investigations into the circumstances surrounding the recent appalling behaviour of P&O Ferries, following the business secretary asking they undertake a thorough review.

“We will not provide further comment while investigations are ongoing.”

The Insolvency Service reaches the point of launching an investigation when it considers there is sufficient good reason to do so and that it is in the public interest.

Pressure on the service to move ahead swiftly came soon after the parliamentary business and transport committee hearings, after it had given an original commitment to decide by 7th April.
P&O Ferries declined to comment.

The TUC general secretary, Frances O’Grady, said the probe must not “shy away from serious sanctions and big financial penalties”. She added: “P&O must not be allowed to get away with its scandalous and unlawful treatment of staff. Firms who behave like corporate gangsters deserve far more than a slap on the wrist.”

Mick Lynch, the RMT union general secretary, said: “This is long overdue but now gives clear grounds to detain P&O’s ships while the criminal and civil investigations are completed, and justice is delivered for our members in face of this corporate hostility.”

Analysis: P&O Ferries, Consulting Workers and the Right to Strike
By Adrian Weir

Someone in my social media feed recently posted that the P&O Ferries scandal showed how vital it was that workers were in a union. That of course is true in any working environment but what P&O Ferries has shown us is that not only do workers need unions, at the same time workers’ unions need power.

Power may come from a number of sources, including the mobilisation of members. Power also derives from strong rights at work not only for individuals but critically for unions. The P&O Ferries case has so graphically shown that unions in Britain do not have the legal right to immediately defend their members. Nor do they have the right to take action to support workers who may not be their members involved in a dispute with an employer with which the union has no relationship.

It has long been recognised that although Britain was a founding signatory of the UN’s International Labour Organisation Conventions 87 and 98 on the right to organise, to bargain and arguably to strike the problem, and it is a big one, is that, as the TUC has found on numerous trips to Geneva to plead the case against the UK Government for Convention breaches since 1980, there is no effective enforcement mechanism against governments that create a legal framework that allows for example, P&O Ferries, to act as it chooses.

Prof Keith Ewing has elsewhere set out many other international legal instruments that the Government or P&O Ferries may be in breach of not least the obligation on a government to ensure that its civil service protects the human rights of workers.

On 22nd November last year Secretary of State for Transport Grant Shapps MP in Dubai met Sultan Ahmed Bin Sulayem, CEO of P&O Ferries’ parent company DP World. At the meeting Sulayem said: “In respect of our ferry business, there’s a new low-cost competitor from Irish Ferries. This poses challenges in respect of P&O’s operations. We kept ferries operating during the height of the pandemic to support movement of people and goods.”

The official minute does suggest that P&O Ferries owners did advise the Government in advance of the 800 sackings but as the Department of Transport appears to have done nothing it would seem that the UK Government is in another breach but with no remedy for those dismissed.

More concretely, although protected in the international instruments and in UK labour law it is the failure to inform and consult with the recognised unions, RMT and Nautilus, over the proposed redundancies that has caused such a backlash for P&O Ferries.

The failure of UK law to protect workers was explicitly spelt out by P&O Ferries CEO Peter Hebblethwaite when he appeared before the joint meeting of the Business, Energy, Innovation & Skills and Transport Select Committees in Parliament.

When pressed by Andy McDonald MP Hebblethwaite said: “There is absolutely no doubt that we were required to consult with the unions. We chose not to do that.” He went on: “It was our assessment that the change was of such magnitude that no union could possibly accept our proposal.” How right he was.

Hebblethwaite went on to say: “because we chose not to consult … we are [compensating] and will compensate everyone in full for that.” It is reported that each of the 800 may be in line for an average of £15,000 compensation (presumably after signing a settlement agreement). So there we have it, a major company wanting to change its business model can just factor in these costs, pay them, in this case apparently £12 million, and essentially get away with it.

Hebblethwaite subsequently appeared before a similar committee at the Scottish Parliament where his grip on reality seemed to be slipping away. After admitting breaking the law over failure to consult RMT and Nautilus he said: “we are very clear that we have not done anything illegal” and commenting on what he hopes will be the future with crews supplied by agencies and no collective agreement he said “I absolutely respect unions and we will continue to work with the unions we have representing our workers.”

The initial sackings and Hebblethwaite’s appearances before parliamentary committees has provoked even the UK Government into doing more than handwringing. On 29th March it announced a new statutory code “to prevent unscrupulous employers using fire and rehire tactics.” Let it not be forgotten that last Autumn this is the Government that talked out Barry Gardiner MP’s private members’ Bill that attempted to do just that.

This initiative must clearly rank as a major damp squib even for a Government that has damp squibs as its stock in trade. Cutting through the Minister’s bluster in the BEIS press release we find out that among a number of limited measures what’s promised is that a court or Employment Tribunal may award, if it believes that the new code has not been followed, a 25% increase in the compensation payable to workers.

As deadline day for signing up to the company’s offer has passed and with the overwhelming majority of those dismissed understandably accepting, Nautilus has correctly observed that P&O Ferries “has got away with it.”

It could be assumed that in the P&O Ferries case the new Code would mean all the employer would have to factor in as transitional costs in the move to the new business model would be £16 million instead of £12 million today. As John Hendy QC remarked on Twitter: “This won’t do.”

What would do however, is a major reform of labour law that would reinstate a right to strike in Britain. We need not just a right to strike in the direct employment relationship but additionally a right to take sympathetic strike action in support of workers that may have little or no connection with the first group proposing to take action.

With ro-ro ferries there clearly is not a need for a large number of dockers to handle these vessels and their cargo but there will be mooring gangs who secure the ships as they come alongside – it would seem that these workers are critical and if called on to strike in support of dismissed crews would have great impact in limiting the operation of services.

Other maritime workers essential for the operation of the ferries are shore based workers in the ports – staff who check in cars and commercial vehicles as they arrive at the port; others who marshal cars and lorries on the quayside prior to embarkation; and, those who drive the tractor units towing lorry trailers on and off the ferry. Again these workers seem critical and if mobilised to strike would bring ferries to a standstill.

We have the bizarre situation where dock workers in Rotterdam have taken strike action to support the 800, action that in the UK would be unlawful. It was not balloted, no notice given to the employer, not connected with their own employer, concerned with matters overseas – if in the UK the grounds for an employers’ injunction in the British courts are endless.

Such a necessary reform would, as John Hendy has argued, guarantee “the legal space, protected from injunctions and damages claims, in which to organise industrial action.”

Adrian Weir is Asst Secretary of the Campaign for Trade Union Freedom

Grant Shapps’s P&O response is far from adequate says Lord John Hendy QC

The statement by Grant Shapps on March 30th of the government’s response to the sacking of 800 P&O seafarers, whose time for accepting the company’s offers runs out today, is too little too late. The announcement of the sackings was two weeks ago on March 17. Why has the government waited so long to act?

Some of the proposals are welcome, without a doubt. The proposal for European ferry corridors with a European minimum wage for seafarers and the proposal for the Maritime and Coastguard Agency to apply rigorous checks on safety are, of course, to be commended.

An amendment to the Harbours Act to enable British ports to refuse access to ships not paying the minimum wage is excellent — but how that will work in freeports in which P&O’s owners DP World have a share is not clear.

Some of the proposals in the statement are far too weak. The requirement for ferries to pay the UK national minimum wage, for example. That will mean a savage wage cut for some seafarers and will have the effect of excluding the unions from wage negotiations. On the other hand, it will prevent ferry companies undercutting each other on wages and it will prevent them paying £1.84 per hour as some sought to do.

Another weak measure is the proposal for a statutory Code of Practice on “fire and rehire.” That is a problem that cannot be addressed without legislation and just weeks ago the government voted down Barry Gardiner MP’s Bill on the subject. The proposed code is no substitute.

But it is the measures which the minister is not proposing that could have been the most significant.

In the first place, it is to be noted that the proposals so far do not involve the seafarers and their unions. Indeed, the unions seem to have been written out of the script.

The most important single step that could be taken would be to lift the blanket ban on secondary action to allow the workers and their unions to ask other workers who share the universal contempt for what P&O has done to boycott the ships until the seafarers are reinstated — just as the dockers in Rotterdam have done (and are allowed to do under Dutch law).

Secondly, the statement does not propose the solution which is so obviously needed in the ferry industry: a collective agreement for the sector negotiated between all the employers and the unions to set minimum wages, terms and conditions so that one ferry company cannot undercut another by reducing labour costs.

This step, “fair pay agreements” as Labour’s New Deal for Workers calls it, is common throughout Europe and has just been adopted in New Zealand.

Thirdly, if Shapps had adopted Gardiner’s Bill it would have allowed workers to obtain a court injunction to compel consultation to take place. In fact, none of Shapps’s proposals allow the workers to obtain injunctions to prevent behaviour such as that of P&O.

The statement also fails to remove the cap on compensation for failure to consult or for unfair dismissal in these circumstances, an obvious measure to discourage such behaviour in the future.

It does nothing to address the discriminatory nature of dismissals of British crew, or to protect against the gagging agreements (NDAs) which the seafarers had to sign to get anything. It says nothing about the apparent loophole which permitted P&O to escape the fine which would have been payable for failure to give advance notice to the authorities had the ships been registered in the UK.

What we need is the restoration of the freedom of unions to defend their members and legislation guaranteeing unions the legal space, protected from injunctions and damages claims, in which to organise industrial action.

That is the only legal way to rebalance power at the workplace and give workers the leverage to resist tactics like those of P&O. This is the only way to fight back against the all-out attack on the incomes and conditions of the working class which is now being waged.

We need the restoration of the freedom of unions to defend their members – Lord John Hendy QC on P&O

“We need legislation guaranteeing unions the legal space, protected from injunctions & damages claims, in which to organise industrial action. That is the only legal way to rebalance power at the workplace& give workers the leverage to resist tactics like those of P&O. “

On 17th March 2022 P&O Ferries (Jersey) Ltd sacked officers and crew of their ferries operating from and to the UK in order to replace them with agency crew from India and elsewhere to work at an average rate of £5.50 per hour.

The sackings were carried out by a pre-recorded video message and hand delivered letters of instant dismissal. Those on board the vessels were escorted off by hired security and their cabins emptied. There was no prior consultation with the seafarers unions. No prior notice was given to the UK authorities or those of the countries in which the ships were registered.

The law was broken. The Chief Executive admitted in Parliament that it had a statutory duty to consult the unions but decided not to.

The company has also admitted that it broke UK law by failing to give prior notice of the dismissals to the authorities of the countries in which its ships are registered (none have British flags). Failing to give such notice to the UK authorities for dismissals in the UK or from British registered vessels is a criminal offence but the company claims it is not criminal to fail to give notice in respect of foreign registered ships to their authorities.

Given the manner of dismissal, the law on unfair dismissal would also seem to be broken.

The company has not admitted that it broke the Equality Act by selecting largely UK seafarers for the sack – which looks suspiciously like discrimination on grounds of nationality.

The seafarers were given offers of compensation exceeding what the company calculated an employment tribunal might have awarded. Each worker was given a 14 day ultimatum to accept the offer and sign non-disclosure agreements. Unsurprisingly, the overwhelming majority accepted the offers rather than risk getting less in a tribunal (which might take a year). The company anticipates recouping these costs from the poverty wages it will pay the new crews.

This sorry saga shows that UK law is wholly inadequate to protect workers against such sackings and flouting of the law, conduct which has been condemned in the strongest terms by the whole country. Even the government, having stalled on its promised Employment Bill for the last four years, has now pledged to come forward with a package of measures to prevent such behaviour in the future. At the time of writing, what this package will contain is not known, save that it will be too late for the seafarers whose 14 days will run out.

There has been talk of applying the national minimum wage to ferries. But that would mean a savage wage cut for many and it would mean wages would be set by government instead of by collective bargaining. The government also might amend the law by increasing the maximum ‘protective awards’ (compensation for non-consultation). Such options would help. But they won’t deter employers who have calculated the cost of breaking the law and are prepared to pay it in the expectation of future profit.

The government could do a U-turn and adopt MP Barry Gardiner’s Fire and Rehire Bill. That would allow the unions to seek an injunction to prevent dismissals without consultation.

But all these measures miss the real problem here, namely that forty-two years of anti-union legislation have neutered the capacity of unions to defend their members.

Of those restrictions, the single most significant reform would be to restore the right to organise solidarity action. If dockers, tugboat crew, pilots, cleaners, ship repairers, refuse disposal teams, refuelling workers, and lorry drivers could be called upon to take solidarity action and refuse to service the ship – as the dockers in Rotterdam have done – this dispute would be quickly ended (and without applications to the courts). These workers and their unions share the common outrage at what has happened. But, in this country, unions are legally prohibited from organising industrial action by workers who are not the direct employees of those in dispute.

The removal of this one prohibition would enable the solution which is so obviously needed in the ferry industry: union pressure to secure a collective agreement for the sector so that one ferry company cannot undercut another by reducing wages, terms and conditions.

We need the restoration of the freedom of unions to defend their members. We need legislation guaranteeing unions the legal space, protected from injunctions and damages claims, in which to organise industrial action. That is the only legal way to rebalance power at the workplace and give workers the leverage to resist tactics like those of P&O. The only way to fight back against the all-out attack on the incomes and conditions of the working class which is now being waged.

Lord John Hendy QC is Chair of the Institute of Employment Rights, Vice President of the Campaign for Trade Union Freedom, and President of the International Centre for Trade Union Rights.
4 Apr 2022 - 09:36 by WDNF Workers Movement | comments (0)