P&O Ferries broke the law by choosing to sack 800 workers without consultation because “no union could accept our proposals”, the firm’s boss has admitted.
Peter Hebblethwaite told a Commons hearing on Thursday into last week’s firings that the firm was halving its costs under a “new operating model”, which meant international seafarers would be paid less than minimum wage.
Fresh questions also arose about what warning ministers had received of the sackings, after Hebblethwaite said P&O’s parent company, DP World, had told the transport secretary, Grant Shapps, of planned changes to its business model in November.
Hebblethwaite faced an intense examination at a joint hearing of the transport and business committee. The business committee chair, Darren Jones, opened by asking about Hebblethwaite’s recent rise to the chief executive position at P&O: “Are you in this mess because you don’t know what you’re doing, or are you just a shameless criminal?”
Hebblethwaite apologised but said the firm had “otherwise had no future”.
Later he admitted: “There’s absolutely no doubt we were required to consult with the unions. We chose not to do that.”
Andy McDonald MP interjected: “You chose to break the law?”
Hebblethwaite said: “We chose not to consult … and we will compensate every one in full for that.”
McDonald said: “You can’t just absent yourself from the legal framework of the UK.”
Hebblethwaite replied: “It was our assessment that the change was of such magnitude that no union could accept our proposals.”
The P&O boss said the average sacked seafarer on the previous Jersey contracts was paid £36,000 per year.
The replacement crew will receive an hourly rate starting at £5.15, except on the Larne-Cairnryan route between Northern Ireland and Scotland, where it will be bound by UK minimum wage law.
He told MPs he was “saving the business”, adding: “I would make this decision again, I’m afraid.”
Hebblethwaite said he was paid £325,000 with two performance-related bonuses, although he said he “did not know” if he would accept a bonus this year. He did not answer when asked if he could could sustain his own lifestyle on £5.15 per hour, the rate paid to the new crew.
McDonald asked: “How do you expect them to be able to feed their families and pay their bills? It’s incomprehensible that you have broken the law as a business decision.”
Hebblethwaite admitted people were cancelling their trips, especially on the Dover-Calais route: “Some people certainly have.”
He added: “There’s no question the brand has taken a hit. But we now have a competitive, modern business. We have a future now. We don’t have to close the business. I am, again, incredibly sorry.”
Incredulous MPs asked Hebblethwaite to confirm his earlier testimony. Gavin Newlands asked: “What employment law provisions have you breached?”
Hebblethwaite said: “We have not consulted, and for that we are fully compensating people.”
Jones later asked: “You said to this committee you wilfully broke the law …”
Hebblethwaite responded: “I completely hold our hands up that we chose not to consult.”
Hebblethwaite told the MPs that Shapps was informed on 22 November by P&O Ferries’ parent company, Dubai-owned DP World, that it would be changing its business model.
Appearing later in the hearing, Robert Courts, the maritime minister, said: “There was a discussion about challenges to the business but not any more than that.” He said he would send a copy of minutes of the meeting with Shapps to the committee.
Asked if the government intended to prosecute P&O Ferries, the business minister Paul Scully said they were still awaiting guidance from the Insolvency Service, and investigating whether the company had broken the law. But, he added: “You’ve absolutely heard that he has.”
On employment law, he said: “We’ve heard that they have deliberately, wilfully broken the law. That will be for workers and their representatives to address.”
The transport committee chair, Huw Merriman, closed the hearings by describing the evidence as a “tale of corporate thuggery where a huge company thinks it can break the law with impunity”, adding that he hoped the government would seek swift legal remedies against P&O Ferries and legislate to tighten up law.
Unions called for the government to issue an immediate injunction to prevent the ships sailing and reinstate sacked crew. The RMT general secretary, Mick Lynch, said: “This should include the government seizing control of the ships if necessary. We are also calling for the immediate disqualification of Peter Hebblethwaite as a director after he admitted the company broke the law and would do it again.”
Lynch had told the hearing how sacked staff were given until today to accept payoffs, on the basis of non-disclosure and an agreement to forfeit any further legal action.
Legal experts also told the committee that P&O should have notified their ships’ flag states in Cyprus, Bermuda and the Bahamas between 30 and 45 days in advance – rather than on the day.
After the hearings, the Liberal Democrats said Shapps had “serious questions to answer about what he knew and when about P&O’s plans to shamefully sack its workers”.
The transport spokesperson, Sarah Olney, said: “It looks increasingly like Grant Shapps was asleep at the wheel, and missed vital opportunities to intervene and protect people’s livelihoods.”
A Department for Transport spokesperson said DP World did not tell Shapps of “any changes it would be making to P&O Ferries” nor give an indication of the “completely unacceptable changes it has subsequently made”.