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Law-breaking P&O Ferries set to escape penalties over seafarer sackings

‘I would make this decision again,’ P&O Ferries chief Peter Hebblethwaite tells UK lawmakers

DP World-owned company exploits regulatory gap in UK labour laws to avoid unlimited fines for sacking 800 staff as it buys its way around the law

P&O Ferries admitted it deliberately breached UK laws with its mass sacking of 800 staff and seafarers working on its British-based ferry services, and that parent company DP World was bailing the company out by covering the compensatory and other financial costs of doing so.

Peter Hebblethwaite, chief executive of the 178-year-old ferry company, told a UK parliamentary committee hearing that it had failed to notify the government, flag states or consult with unions as legally required.

“We chose not to consult because the consultation process would have been a sham,” he told the emergency hearing of the joint select committee of transport and business about the March 17 sackings.

It ignored legal requirements because “it would be a change of such magnitude that no union would agree to our proposal”, he said.

P&O Ferries instead chose to compensate staff for the lack of notice to match capped penalties, amid accusations that the company and its Dubai-based parent, DP World, bought their way around lax UK employment laws. The company said redundancy payments were £36.5m ($48.1m).

The company has exploited a regulatory gap in the UK to avoid penalty for failing to provide proper notice to the three flag states of Cyprus, Bermuda and the Bahamas, legal witnesses said.

In an extraordinary hearing lasting more than three-and-a-half hours, the committee was told by Mr Hebblethwaite and DP World chief operating officer Jesper Kristensen that they had no regrets about their decision and would repeat it, despite widespread public and political outcry in the UK.

Key disclosures from the two men included:

* The government had advance notice of changes when Transport Secretary Grant Shapps met with the DP World executive team while attending a Dubai expo on November 22. He was told that P&O Ferries planned “changes to its operating model”, but these were not outlined.

* Sacked staff that were immediately replaced with agency seafarers under what was referred to as a “new operating model” were “half the price of the previous model” with average wages now at £5.50 an hour, which was “in line with or above ITF minimum standards”.

* P&O Ferries would meet £146m in liabilities owned to a merchant navy pension fund, and because the company was on the verge of insolvency that DP World would help them.

At times MPs gasped as the P&O Ferries and DP World executives inferred that ignoring UK law was the only way to keep P&O Ferries viable and sustainable.

Former employees had contacted the MP Nusrat Ghani, a former Tory shipping minister, and sent photographs of their belongings on passenger ferry Pride of Kent (IMO: 9015266) that were placed in bin bags and dumped on decks next to skips.

The way the sackings were conducted meant P&O Ferries avoided employment tribunals, injunctions and penalties.

“There’s little doubt in my mind that what occurred involved multiple breaches of the labour legislation,” said Alan Bogg, professor of labour law at Bristol University. “In legal terms what happened was so blatant, and so outrageous, that there can be very little argument about whether the law covered it.

“The key issue is an issue of remedies, and a lack of effective remedies in situations of this nature.”

A loophole in the law meant that P&O Ferries would escape criminal sanctions and unlimited fines.

“There is some concern… as to whether that the failure to notify the ship registries in these different jurisdictions actually would attract a penalty,” said Jason Chuah, professor of commercial and maritime law at London’s City Law School.

“The relevant section simply refers to the duty to notify, or the failure to notify the secretary of state, it does not actually refer to a failure to notify the flag state.

“We are really unsure as to whether the failure to notify within those set parameters would attract any kind of sanctions under a Trade Unions and Labour Relations Act.

“The penalty provision, relating to notice, does not actually specify this particular seafaring category, and that is perhaps a gap in the law.”

P&O Ferries failed to provide proper notification to flag registries, said Maritime and Coastguard Agency chief executive Brian Johnson.

Mr Hebblethwaite also confirmed this, saying that the registries were informed on March 17, the day of the sackings, along with relevant UK government ministers.

The committee acted incredulously when the government’s Insolvency Service said that it would not be able to notify Mr Shapps about whether there had been breaches and possible action until April 8.

The Maritime and Coastguard Agency was questioned over its Port State Control inspections on March 22 and March 23, which approved Pride of Hull to sail to Rotterdam from Hull overnight without passengers and freight.

This is the first of the approximately 20 affected vessels that has sailed since the sackings.

Some 18 of the 110 crew on board had been replaced with agency staff, Mr Johnson said, and Dutch authorities would undertake further surveys to allow it to sail with passengers and freight.

Inspections dates for a further eight ferries on the Dover-to-Calais, had not been set, according to the MCA.

Mr Hebblethwaite, who earned £324,000 a year, said “we did consider every single option available to us and we concluded that every single option available to us would result in the closure of P&O”.

The new crewing model was such a “fundamentally different operating model that no union could accept it”.

Mr Kristensen, speaking remotely, said P&O Ferries was not viable or sustainable unless it took this path.

He acknowledged that this would have a wider impact on other DP World businesses in the UK including their terminals at Southampton and London Gateway, and its freeport projects.

The way the sackings were undertaken were not in conflict with DP World principles to adhere to human rights principles he said.

“We have taken into consideration that this decision could have some kind of impact, beyond P&O Ferries,” he said. “The commitment of DP World to the UK economy amounts to billions of pounds of investment in terminals and free zones and that that commitment is second to none.

“We have not invested more funds anywhere else outside of Dubai, than in the UK.”

Seafarer union Nautilus International named Clyde Marine in Glasgow and Columbia Shipmanagement in Cyprus as being complicit in the recruitment of replacement agency staff.

Some 91 members had already been offered their jobs back because the P&O Ferries plan was based around hiring crew from Russia and Ukraine, said Nautilus chief executive Mark Dickinson.

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