Tag: Settlement Agreements

Whilst many will have looked at the behaviour of P&O and criticised them and they are undoubtedly at the extreme end of the spectrum, it has caused me to reflect on the extent to which all organisations from time to time “take a view” about legal risk and to some extent, price that into the decision-making process. I defy anyone in HR to say that they have never done this.

What I think the reaction demonstrates is how far we are moving forward and that ESG is becoming mainstream, with the debate and the discussion about P&O showing that organisations by and large ‘get’ the idea that it’s more than just about legal compliance but treating people fairly and with dignity as well as ensuring the right image for the organisation, in terms of its values is as important, given what can happen with social media.

The Government has clearly been on the backfoot — literally in the days leading up to P&O Friday, following a private members bill, attempting to tackle so called fire and re-hire practices, the Minister stood up in parliament and confirmed that the government had no intention of making any changes in this arena. Fast-forward a couple of weeks and now hasty announcements around a number of steps that are going to be taken in the maritime area to ensure National Minimum Wage etc.

The relevant issue for everyone is in relation to what they have said about a new statutory code on ‘fire and re-hire’ tactics which will be produced. It sounds as though this will be putting what Acas already advise onto a statutory footing, in the same way as we used to with the Disciplinary and Grievance Procedures. We are already used to Tribunals and Courts taking the Code into account when considering cases of unfair dismissal and them having the power to uplift the award that is made to any successful employee’s compensation by up to 25% where there has been an unreasonable failure to follow that Code. That is the model that is going to apply here.

At this stage we don’t have the actual Code but I would imagine that it will be following the guidance that is already there to consult with staff, taking into account the background legal position on this issue. Indeed the 11th November 2021 advice published by Acas suggests employers should fully consult their workforces and make every effort to reach agreement on any contract changes, noting that fire and re-hire is an extreme step that can damage staff morale, trust, productivity and working relations. So in effect this is just giving the Acas guidance statutory force. Currently there has been no confirmation of when exactly this will happen.

On another note it looks like the insolvency service has been tasked with considering the circumstances around the CEO of P&O’s failure to lodge the HR1 form which is a criminal offence and the responsible statutory director can be fined for this. I imagine that there is a certain amount of political pressure to ‘make an example’. I know a few years ago I looked into how many times this had actually been done and the evidence base was really small, to the point of being miniscule. However, there were directors who made redundancies during furlough who were prosecuted so there is a precedent. Even if an employer decides to do what P&O did and commence with statutory consultation because they would essentially be buying out that right by making ex gratia payments under a settlement agreement, it would still be important for the HR1 form to be filed as a protection for the directors involved.

Anna Denton-Jones
Refreshing Law