P&O chief admits breaking law over mass sackings

The chief executive of P&O Ferries caused uproar as he admitted to breaking the law by firing the company’s entire UK crew without notice or consultation.

Giving evidence to UK MPs on Thursday, Peter Hebblethwaite was asked if he had “wilfully” broken the law by paying off almost 800 staff instead of launching a formal consultation as the law requires, he said: “I completely hold my hands up . . . we did choose not to consult.”

“There’s absolutely no doubt that we were required to consult with the unions. We chose not to do that . . . and will compensate everybody in full for that,” he said.

Any consultation would have been a “sham”, he argued, because the company was moving to an entirely different operating model and “no union could accept our proposal”.

MPs accused the company of “thuggery” and “behaving like gangsters”.

“You haven’t escaped the law of this country. You still have to do it within the legal framework, you can’t just decide you can absent yourself. I’ve never heard such farcical answers,” said Andy McDonald MP.

Huw Merriman, chair of the transport select committee, said Hebblethwaite should resign and warned of a “race to the bottom” as other ferry companies tried to compete with P&O’s new cost base.

Employment lawyers said staff could chase P&O through tribunals, but that would mean giving up severance payouts. More than 500 of the 800 impacted crew have already accepted terms.

“Whilst employment rights exist, they rarely, if at all, prevent an employer doing as it wishes . . . it is just that there will typically be a price to pay if it chooses to ignore legal process,” said James Froud, head of employment at McCarty Denning.

Under the new model, new P&O crews will be paid an average of £5.50 an hour, which is legal despite being well below the UK minimum wage. This is because P&O ships operate in international waters.

Hebblethwaite apologised to the people fired last week but insisted that replacing them with cheaper international agency staff was the only way to “save the company”.

“The business was not viable . . . I would make this decision again I am afraid,” he said.

P&O has been heavily criticised for sacking the crew members without notice last week, many of whom found out via video message.

Hebblethwaite, who did not rule out accepting a bonus this year, admitted that there was “no question the brand has taken a hit”.

P&O also chose not to conduct a full consultation after calculating that the process would cost more than £300mn and potentially deal a fatal blow to the business, according to two people close to the company.

The operator last year conducted a study into options to sustain the business and protect its other 2,200 staff.

The people said P&O concluded that it would cost its Dubai owner at least £309mn to sustain the company through a likely consultation period of three months or longer, with no guarantee of recovery.

Business minister Paul Scully told the hearing that the government was considering “any options that are open”, including looking at the liabilities of individual directors.

He added that P&O had also appeared to break the law in Cyprus, where some of its ships are registered, by failing to warn authorities there about the sackings. “We need to test UK jurisdiction,” he said.

Louise Haigh, Labour’s shadow transport secretary, said the government had done “absolutely nothing”.

MPs also heard that P&O is still at least days away from restarting services between Dover and Calais, given that none of its ships on that route has yet been inspected by the Maritime and Coastguard Agency.

Hebblethwaite said transport secretary Grant Shapps had been warned that P&O was in trouble and needed to make changes during a trip to Dubai in November.

One government official said the claim that Shapps was forewarned about the looming crisis was “rubbish”.

Shapps met Sultan Ahmed bin Sulayem, chief executive of DP World, on November 22.

“The minutes say that the only thing that Sulayem said to the transport secretary was that there was a new low-cost operator on the market and that posed challenges in respect of P&O’s operation,” the official said.

“He didn’t say anything about potential redundancies, or redundancies, let alone hundreds of redundancies.”

P&O owner DP World, which is one of the UAE’s largest investors in the UK with about £3bn, has ploughed more than $700mn into the ferry business.

Jesper Kristensen, chief operating officer at DP World, said the company had supported the sackings despite knowing “this decision could have some kind of impact beyond P&O” in the UK.