UK ministers have asked the government’s Insolvency Service to investigate whether P&O Ferries has breached labor law by firing 800 UK-based sailors and replacing them with temporary workers.

The operator, owned by Dubai-based DP World, sparked an outrage from ministers and union leaders with its decision on Thursday to abruptly fire the crew without notice.

Peter Hebblethwaite, chief executive of P&O Ferries, said in a letter to the remaining employees, seen by the Financial Times, that the radical decision had been made “to reduce our crew costs by 50 percent, secure the future of our company and to prepare for growth”.

But in a separate letter to P&O Ferries on Friday, company secretary Kwasi Kwarteng said the company did not appear to have followed proper legal process and that he had asked the Insolvency Service to investigate. Meanwhile, he asked the company to explain “why you don’t think these rules apply to you.”

Nautilus International, a union for British, Dutch and Swiss seafarers, said it believed P&O had acted illegally by failing to initiate a consultation process before the layoffs or notifying the company secretary.

Alan Bogg, a professor of employment law at the University of Bristol, said P&O’s action appeared to be a “clear breach” of its obligations under collective redundancy legislation.

The P&O Spirit of Britain docked in Dover harbor after P&O Ferries suspended sailingsThe P&O Spirit of Britain docked in Dover harbor after P&O Ferries suspended sailings © PA

A company that lays off 20 or more employees within 90 days is required by UK law to hold a consultation before laying off the staff. Eight hundred P&O employees were told on Thursday that their employment would end that evening. A company that lays off more than 100 people must also notify the company secretary in writing of the proposed layoffs before notifying employees that their contracts will be terminated, and at least 45 days before the layoff begins.

P&O declined to comment on whether it had complied with its legal obligations.

The workers laid off on Thursday were employed by an employment agency in Jersey. But Nautilus claimed that their jobs were still under UK law and protection as this was the jurisdiction specified in their contracts.

Does it matter that P&O pays a fee?

Hebblethwaite told staff on Thursday the company would give “enhanced severance pay” to laid-off workers to compensate them for lack of notice.

Neil Todd, a partner at Thompsons Solicitors, who advises the RMT union, said P&O effectively “bought out its obligations under UK law” by offering staff 13 weeks’ pay on top of a severance package – equivalent to the fine it should pay if a labor court finds that it has violated the collective bargaining obligation.

In an “extreme scenario, such as company bankruptcy or . † † a crisis that could not have been foreseen” an employer could have a defense for not using proper procedure, said Richard Fox, an employment law partner at Kingsley Napley.

But firing people to replace them with cheaper temporary workers “doesn’t sound like the kind of emergency the tribunal would be looking for,” he said. “My guess is they priced in what the worst could happen and then offered that payment.”

Can this go to court?

It was possible that unions would demand a ban on forcing HR to consult employees, said employment lawyer Alex Mellis.

Darren Procter, national secretary of the RMT, said the union advised workers not to sign severance agreements yet while it considered legal action.

However, winning a wrongful layoff claim would be of little benefit to employees, as they had been offered improved layoffs, Nautilus said.

Jo Mackie, chief of employment law at Slater and Gordon, who represents Nautilus, said it could be valuable to set an example of P&O by taking it to court.

P&O can also act separately from the government if it turns out that it has not been properly informed about the redundancy plans. Failure to do so is a criminal offense for which both a company and its directors or officers may be prosecuted. Kwarteng said in his letter to P&O that a violation can lead to an unlimited fine.

Is UK Labor Protection strong enough?

P&O retained staff employed under Dutch and French contracts because these countries’ employment protections were stronger than the UK’s, RMT’s Procter said.

The company’s move exposed the weakness of Britain’s labor market enforcement system, given “a situation where you have very large, well-resourced employers making decisions to intentionally break the law,” said Bogg of the University of Bristol.

The trade union congress called on the government to urgently introduce an employment law to strengthen workplace protections and impose severe penalties on employers who break the law.

“What happened at P&O is a national scandal – it must never happen again,” said Frances O’Grady, general secretary of the TUC. “This should be a turning point for workers’ rights in the UK.”

Michael O’Dwyer, Harry Dempsey and Delphine Strauss in London and Ian Johnston in Dover with additional reporting by Peter Foster

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