Over the last two weeks we have seen a significant and worrying example of industrial relations in practice. The country watched in horror as 800 workers – the entire employed workforce of P&O – were sacked without warning. Added to this, P&O had agency workers already on site to take over the jobs and had security guards with handcuffs to remove their workforce from vessels if necessary. Last Thursday at the Transport Select Committee hearing in Westminster the CEO of P&O confirmed his awareness that the company had breached UK employment law by failing to consult recognised unions in advance of the redundancies. P+O’s clear and transparent tactic was to offer redundancy packages and settlement agreements to the workforce, banking on paying their workforce to go quietly without challenging their illegal practice.
This case is illustrative of a difficult reality at the heart of our labour market. Employment law is only as useful as it is enforceable. This case demonstrates that employers can simply ignore the law if they believe that they will receive no challenge and no meaningful penalty. At the Select Committee we saw the CEO of P&O explain that since they would not receive agreement from the union, the company had made the decision that they simply would not seek it. Frankly, they saw ignoring the law as the path of least resistance and as a cost-effective way of achieving their intended outcome.
That the law can be so easily ignored should be cause for alarm. Unions play a key role in enforcing employment law and are often involved in developing key case law and challenging poor decisions in the courts, commonly providing benefits for union members and non-members alike. While legal action is still likely to be taken in this case, alarm bells should be ringing loudly. There are many workers around the country working in non-unionised workplaces. What confidence can we have that they are aware of or able to access their rights? If P&O had not been a unionised workforce what tools would workers have had to defend themselves from this type of action and how aware would policy makers and others have been of the decision to dispense with direct employment completely?
While this case points to the weakness of the law, and the critical role that unions currently play in providing some protection for workers, unfortunately it also exposes some of the limits of fair work.
Fair work rests on a core assumption that there will be an ongoing employment relationship. Fair work is built on the idea that the employer and the workforce have a joint interest in making their workplace productive, innovative and a good place to work. The P&O case is an example of an employer stating clearly and openly that they have no need for employees, and instead will outsource and distance themselves from their workforce for clear financial gain. P&O will now use a bespoke agency, set up for this purpose, and unions report that people working for that agency may earn as low as £1.80 per hour. While the company refutes this figure, it is clear that these workers will not be paid the UK National Minimum Wage except on some routes. Public statements from P&O confirm that the motivation for this business model is cost reduction and they are facilitated in this approach by the nature and structure of UK employment law and aided by loopholes that exist specifically for the maritime industry.
The anger that is felt towards P&O is justified. This is an extreme case of an employer ignoring the law, but an all too familiar case of an employer choosing a business model which commodifies their workforce and steps back from their fair work obligations.
Going forward there are some key questions that we must answer if our aspirations around fair work are to be realised. First, will the UK government strengthen employment law to close the loopholes that this company has used to behave so poorly? Second, will the UK government take the steps required to sanction the company for their actions and support effective remedy for the workers who have been treated so poorly?
Third, while the Scottish Government is clear that fair work should be the foundation of all procurement, grants and commissioning, can we be confident that fair work conditionality is sufficiently robust to ensure that P&O can never again enter into a contract or commissioning relationship with the public sector in Scotland, without first providing remedy for workers and changing their proposed business model? This is not an academic question. We know that bids to run Green Ports are currently out to tender in Scotland. We also know that DP World the parent company of P&O already holds freeport licences in the UK and may well bid in Scotland. Can we be certain that any such bid would fail on fair work grounds?
In the Convention’s view fair work conditionality should include the use of exclusions for companies found to have significant breaches of employment law. We would expect to see this provision applied to a company like P&O or DP World. If Fair Work conditionality is to carry weight it must have discernible impact in practice, acting as a deterrent against egregious employer practice and as an incentive for good employer practices.
Our vision is for Scotland is to be a world leading Fair Work Nation. There is no place for ignoring the law, mass redundancies and exploitation of outsourced labour in that vision. No company should be able to buy its way out of legal obligations to workers and to society. There should be no room in Scotland’s Green Ports for P&O/DP World to dock.
