National Union of Rail, Maritime & Transport Workers
Response to BEIS Consultation
Draft Code of Practice on Dismissal and Reengagement (Fire and Re-hire)
Introduction
The RMT is Britain’s largest specialist transport union and has more than 80,000 members from almost every sector of the transport. RMT is by some distance the largest rail union. We also organise in the offshore energy sector and seafarer Ratings, one of the grades affected by P&O Ferries unlawful mass dismissal of seafarers on 17 th March 2022. The Government included this consultation on a draft code of practice for fire and re-hire in its nine-point policy response to P&O Ferries’ unlawful attack on jobs and conditions.
Executive summary
• Fire and re-hire should be banned, not subject to voluntary codes of practice.
• Post P&O Ferries, this draft Code and the Government’s Nine Point response will lock in the breaches of law by P&O Ferries on 17th March 2022.
• Despite its inclusion in the Government’s Nine Point Plan on P&O Ferries, the draft Code does not acknowledge the different laws applicable to seafarers’ contracts of employment or recognise, at any stage, the weaker protections for seafarers’ employment rights which P&O Ferries and others are exploiting.
• There is nothing retrospective in this draft Code which offers any prospect to workers affected by P&O Ferries or any other attack on jobs and terms and conditions of employment.
• The definition of ‘last resort’ in the draft Code of Practice could provide an incentive to fire and re-hire staff to maximise profits at the expense of workers’ pay and conditions, as well as their trade union and employment rights.
• The draft code creates a vague process by which employers only need to consider. There is nothing to indicate how the employer’s compliance with the statutory guidance will be independently verified, beyond an occasional reference to ACAS. This makes it very likely that the Code will damage industrial relations.
• Trade union recognition agreements are downplayed in the draft code, suggesting that an unorganised workforce has as much power in these ‘last resort’ negotiations as an organised workforce. This is dangerous and ignores fire and re-hire cases from the rail industry.
• There is nothing to recognise the specific threat and different contractual laws and practices in the shipping or offshore energy industries.
• Cases like P&O Ferries dismissing their employees and replacing them with agency workers is a clear threat to all seafarers and land-based staff but merits no mention at all in the draft document, only a reference to new staff being hired on inferior terms and conditions.
• The employer, and any multinational owners, should share information on historic profits, dividends and executive pay levels with workers and their trade unions if they are contemplating fire and re-hire, as a minimum.
• Tackling the gender pay gap and flexible working are not legitimate reasons for firing and re-hiring staff and should not be presented by Government as such.
P&O Ferries
P&O Ferries instantly, unlawfully and unfairly dismissing its entire UK seafarer workforce. Those workers were covered by collective bargaining agreements but P&O conducted no prior consultation at all with the workforce through their recognised trade unions and no prior notification of the flag states involved, namely Cyprus, Bahamas and Bermuda. These were clear breaches of the law, yet the Insolvency Service has decided not to press criminal charges against P&O Ferries. A civil investigation of P&O Ferries is ongoing.
It is absolutely disgraceful for the Government to have taken another year to consult on this token response to P&O law breaking, during which time it has also introduced primary legislation to further undermine frontline public service workers’ rights, through the Minimum Service Levels Bill.
The directly employed P&O seafarer workforce were not re-hired and P&O Ferries ceased to employ any seafarers on eight ferries working from UK ports, on domestic and international routes. Our members and their directly employed colleagues were immediately replaced by a largely international workforce employed via an agency in Malta which was set up the month before these dismissals. This affected 786 workers, over 400 of whom were RMT members.
The Government folded fire and re-hire reform into its response to the P&O Ferries scandal when the then Transport Secretary, Grant Shapps MP announced the Government’s nine point plan in response to P&O Ferries, on 30 March 2022 including
“…we will take action to prevent employers who have not made reasonable efforts to reach agreement through consultation, from using fire and rehire tactics. A new statutory code will allow a court or employment tribunal to take the manner of dismissal into account and, if an employer fails to comply with the code, to impose a 25% uplift to a worker’s compensation.”
The Government’s approach seems to be to avoid P&O Ferries breach of Sn 188 of the TULRC Act 1992 and create a code of practice which will apply to seafarers on international routes, although the draft document doesn’t say this.
Crucially, the Government is not proposing to strengthen protections for seafarers in the three general protections all workers are entitled to and which P&O Ferries and their owner DP World quite clearly breached, namely:
• wrongful dismissal (if their employer did not follow the correct procedure when firing them)
• unfair dismissal (if their employer didn’t have a fair reason for firing them, or did not act reasonably); and
• the right to be consulted in the event of mass redundancies involving 20 or more workers.
It has been established at Employment Tribunal that P&O Ferries unfairly dismissed one of their workers on 17 March last year.1 Mr Lansdowne was the only former P&O Ferries crew member to take legal action against the company. RMT was unable to support mass legal action for fear of incurring a huge legal bill which would only, at best have secured members the same payment as those P&O unlawfully offered their former staff, on the condition that they immediately vacated the ships (without taking their personal belongings with them) and signed non-disclosure agreements.
RMT repeat that P&O Ferries knowingly and unashamedly breached Section 188 of the Trade Unions and Labour Relations (Consolidation) Act 1992 and it has benefitted from weaknesses elsewhere in the Act, especially in the Government’s interpretations of Sections 193, 194 and 285. Nowhere in the Government’s response to P&O Ferries is there any plan to close these loopholes or to strengthen seafarers’ statutory employment rights.
Section 285 was cited in the Insolvency Service’s decision in August 2022 2 not to proceed from the evidential test to a public interest test of prosecuting P&O Ferries for criminal offences, because Section 285 in the judgement of the Insolvency Service only provided an ‘even chance’ of a successful prosecution.
Yet there is nothing in the nine-point plan to close loopholes in the 1992 Act, despite the urgent need to equalize seafarers’ basic employment rights with those of land-based workers. The legal protections P&O breached were introduced in 2018, 3 with the support of the trade unions in line with measures in the EU Seafarers Directive 2015.
Seafarers lacked basic rights to consultation, notification, redundancy and TUPE before the 2018 legislation and the changes were made with the express intention to, as the Minister at the time, Nusrat Ghani MP stated:
“…ensure that seafarers and share fishermen have the same employment rights and protections as those who work in land-based roles.” 4
This is why P&O Ferries’ decision to breach them must be the start of a fightback against this despotic approach to industrial relations in the ferry industry. Unfortunately, the draft Code of Practice is woefully inadequate in this regard and would have provided no protection for seafarers from P&O Ferries’ actions.
RMT support the following reforms to the Trade Union Labour Relations (Consolidation) Act 1992 as a direct response to P&O Ferries:
1 https://www.bbc.co.uk/news/uk-england-kent-63090372
2 https://www.gov.uk/government/news/po-ferries-update-from-the-insolvency-service-19-august-2022
3 Seafarers (Transnational Information and Consultation, Collective Redundancies and Insolvency Miscellaneous Amendments) Regulations 2018 & the Seafarers (Insolvency, Collective Redundancies and Information and Consultation Miscellaneous Amendments) Regulations 2018
4 Delegated Legislation Committee, 6th February 2018.
Amending section 188 of the Act to ensure that it clearly applies to seafarers working regularly from UK ports on international routes, regardless of nationality or flag of vessel.
• Outlawing ex-gratia payments to employees connected with an intentional breach of Section 188 of the 1992 Act.
• Amending Section 193A (2) to legally require employers to notify the secretary of state for Transport, regardless of the flag of the vessel of an intention to make more than 20 seafarers redundant.
• Amend Section 194 (3) to ensure that the definition of body corporate applies to overseas owners such as DP World.
• Amend section 285 to provide these protections against instant dismissal for all seafarers working regularly from a UK port, regardless of nationality or the flag of the vessel.
Workers and their trade union representatives should also have access to injunctive relief in cases like P&O Ferries, where an employer takes unilateral, pre-meditated and illegal action against jobs or terms and conditions of employment without any prior consultation with the workforce or their trade unions.
In reality, this statutory code of practice is not the right response to P&O and the catalogue of fire and rehire cases amongst land-based employees.
The draft code of practice also amounts to a licence to dismiss or ignore existing collective bargaining agreements, akin to the actions of P&O Ferries in March last year. This consultation, launched nearly a year after the mass dismissals and replacement with a new employer as well as a new crew on inferior terms and conditions, is part of the Nine Point Plan announced by Grant Shapps on 30th March 2022. It is also part of the current Conservative Government’s extremist, anti-trade union agenda.
Application for Seafarers
The draft Code of Practice lists at Paragraph 18 “specific legal information and consultation obligations which are beyond the scope of this Code” with which the employer will need to ensure it complies with “including identifying the correct body or bodies with which to consult.”
The list at para 18 includes Section 188 of the TULRC Act 1992, which P&O Ferries breached on 17 March last year. The Government is hinting at the circumstances of P&O Ferries actions without referring directly to the weaker protections for seafarers from unlawful dismissal, particularly on international routes from UK ports on flag of convenience registers like Cyprus or the Bahamas.
This is why a voluntary code of practice, even with recourse to ACAS, is wholly inappropriate for fire and re-hire because all the Government is doing is drawing attention to how the Government thinks an employer should carry out fire and re-hire. And that inevitably creates conflict with collective bargaining arrangements (CBAs), where they exist and makes workers even more vulnerable and insecure where CBAs don’t exist.
For seafarers, the Government’s draft proposals do not mention seafarers, despite their greater vulnerability to attacks by employers and the weaker statutory framework they have to rely on. This is a deplorable position to be in after P&O Ferries openly illegal assault on jobs and employment rights.
Paragraph 21 cites a ‘range of reasons an employer might want to make changes to employment contracts.’ In the case of P&O Ferries, the change was to scrap the employment contracts altogether and to outsource those jobs, effectively to an employment agency in Malta, specifically, it appears, set up for this purpose.
This employment model is far too common on ferries servicing the UK economy, from Irish Ferries and Condor Ferries in ro-pax to Seatruck and Cobelfret (now one entity) in the ro-ro freight sector, the operator of ferry services if often not the employer. This model is even more common in every other sector of UK shipping outside of the civilian crewed Royal Fleet Auxiliary vessels.
Yet, the Government’s draft Code of Practice does not clearly state that it opposes the scrapping of employment contracts and outsourcing jobs to offshore crewing agents. Under the current draft, P&O Ferries’ actions against seafarer jobs, terms and conditions and trade union agreements would fall under the current Government’s attitude to fire and re-hire; namely, an extreme but legitimate employment practice.
The Insolvency Service’s subsequent lack of legal redress for UK seafarers subject to P&O’s criminal attacks on 17 March last year render the draft Code of Practice an enabling tool for law breakers like P&O and their parent company DP World which is carving out a logistics empire off the back of the Conservative Government’s Freeports programme.
In order to prevent the contagion from P&O Ferries spreading on land, the Government need to confirm, within the draft Code of Practice itself, that they intend this statutory guidance to apply to employers, trade unions and workers in Freeports.
Role of trade unions
What is missing from this is a clear statement of support for collective bargaining. An unorganised workforce is far easier to subject to fire and re-hire without recourse to and statutory guidance on this despicable practice which the Government eventually introduces.
So, what would the draft Code of Practice on Dismissal and Re-engagement offer seafarers?
Very little on domestic routes and next to nothing on international routes is the answer. Only a law banning this practice on UK registered ships and on foreign flagged vessels regularly plying trade from UK ports would be effective for seafarer jobs and terms and conditions.
There is a lack of emphasis in the draft code on the role of trade unions in negotiating with employers on behalf of the workforce. And that’s where there are recognition agreements. Workers not covered by a collective bargaining agreement are effectively left to fend for
themselves. The draft code, in that sense, could have an extremely negative impact on jobs, employment rights and industrial relations across the economy.
The ad hoc, precarious nature of employment for seafarers and offshore oil and gas workers also means that the practice of fire and re-hire is common in the shipping and offshore energy industry. This is separate from the P&O Ferries scandal.
Status of the Code of Practice
Section 203 of the TULR (Consolidation) Act 1992 is grounds for the SoS to create Codes of Practice. Section 207 (1) states that
“A failure on the part of any person to observe any provision of a Code of Practice issued under this Chapter shall not of itself render him liable to any proceedings.”
The maximum an employee can derive is a 25% increase in a payment from the employer after winning an Employment Tribunal case. The employee can also have their costs increased by 25% if they do not win their Employment Tribunal case. This threat to reduce the cost of employees is inappropriate and should be removed from the Code of Practice.
These Codes of Practice are not legally binding, and this includes the ACAS codes of practice in the five following areas which were created under the powers in section 203 of the 1992 Act:
1. Disciplinaries and grievances.
2. Disclosure of information by employers to trade unions.
3. Time off/facility time for trade union duties and activities.
4. Employment rights within settlement agreements.
5. Flexible Working Requests.
Adding fire and re-hire to this list of codes of practices gives this unacceptable practice a formal status and, therefore, legitimacy within employment law. The Government need to recognise that a voluntary Code of Practice, with ACAS involvement will damage industrial relations.
As recorded by the TUC, 9% of workers had been affected by fire and rehire since March 2020 – a clear indication that employers were taking advantage of the pandemic and a chaotic, anti-trade union government to undermine pay, terms and conditions. P&O Ferries actions, in particular, would seem to have been an attempt to exploit the temporary financial pressures of Covid (during which they received over £11m in public furlough money but still made hundreds of redundancies amongst seafarers and port staff in the UK).
We do not think that a voluntary code of practice provides sufficient protection for employees from fire and rehire and it certainly provides absolutely no protections for workers from employers like P&O Ferries who are determined to break the law in a premeditated fashion.
Offshore energy
Workers in contractor dominated industries like offshore energy (oil and gas and renewables) also lack employment rights. These de-regulated employment contracts have some protection from collective agreements through the Energy Services Agreement, COTA, Offshore Diving Industry Agreement and amongst those directly employed by duty holders/developers but the oil and gas sector and workers like seafrers in the supply chain are vulnerable to a further loss of rights.
The draft Code of Practice is, of course, silent on offshore workers, despite the tremendous changes underway in the origin, supply, security and mitigation of energy consumption. These massive changes will inevitably affect terms and conditions of employment yet the Code of Practice does not even make a cursory reference to the employment implications of a just transition.
Rail industry case study: Wabtec
In early 2022, RMT members at Wabtec Rail Ltd based at the historic Doncaster New Erecting Shop, birthplace of the world-famous Flying Scotsman and Mallard locomotives negotiated for 12 months in an attempt to find a solution to the financial problems faced by the company.
However, negotiations broke down and Wabtec management informed the union that they were implementing a “fire-and-rehire” process that seriously jeopardised the livelihoods and living standards of skilled rail workers across the Doncaster and South Yorkshire region.
Union members at RMT and Unite on the site began industrial action to defend their jobs and terms and conditions and eventually won concessions from the employer. This demonstrates the value of trade union membership and the vulnerability of unorganised workers, in particular, to attacks on their terms and conditions through fire and re-hire tactics.
Fundamentally, the Wabtec case is another example of the flagrant abuse of employment law which underlines once again the need for the Government to outlaw this abhorrent practice of “fire-and-rehire” once and for all.
Sharing of information and consultation
RMT’s comments should be taken in light of the union’s policy to ban fire and re-hire. In reference to paragraphs 24-42 on employers sharing of information. If the Government is not going to ban fire and re-hire, then it would obviously be a necessary step to require employers to explain why they can or could not provide information requested by trade unions and or individual employees.
However, the Government’s proposal is far too weak. It should also stipulate that trade unions and individual employees should be able to request up to date information on profit levels and any scheduled dividend payments for the financial year. This should recognise
that financial information on Companies House does not provide the up to date financial picture which the employer is claiming justifies the dismissal of the workforce and re-hiring the same or new employees on inferior terms and conditions.
The code should also stipulate that employers are expected to share with trade union representatives and individual employers profit levels, dividend payments to shareholders made by the employer (including parent companies registered overseas) and any support from the UK taxpayer for the last five years. This information will not always be on Companies House and overseas ownership, including offshore, makes it easier for employers to claim that they need to exploit the UK’s weak employment laws to fire and rehire staff here.
We also underline the case of P&O Ferries in this context. By failing to consult the recognised trade unions over the mass dismissals conducted unilaterally on 17 March 2022, P&O Ferries broke the consultation requirements under Section 188 of the Trade Union Labour Relations (Consolidation) Act 1992. P&O Ferries have not been punished for this but neither have they submitted their accounts for the year to 31 December 2021 on Companies House. Whilst those results are not likely to show a healthy condition, due to the effect of the pandemic, they will show any UK taxpayer support the company received.
At the time of writing P&O Ferries leaked their 2021 accounts to the Financial Times5 claiming over £300m losses for 2021 at P&O Ferries and that they were now heading for profitability as a result of the mass sackings. Despite this, a round of redundancies amongst P&O ports staff was announced a few weeks before.6 P&O’s 2021 accounts are still not in the public domain. As RMT General Secretary Mick Lynch said, allowing P&O Ferries and DP World “off scott free is a profoundly dangerous trend for all workers in the UK and anywhere DP World’s subsidiaries operate.”
It is quite clear that a legal duty to consult on fire and re-hire proposals, in line with the provisions of Barry Gardiner MP’s Employment and Trade Union Rights (Dismissal and Reengagement) Bill would be much more effective in protecting staff, trade union rights and employment standards from employers seeking to short cut legal duties in order to fire and re-hire staff.
5 P&O Ferries expects to head back to profitability this year – FT 25th April 2023
6 https://www.itv.com/news/meridian/2023-04-05/60-jobs-at-risk-at-p-and-o-one-year-after-mass-sackingsitv-news-understands