News and Insights
30 March 2022
Nearly two weeks on, there remains considerable public anger around P&O’s decision to fire 800 staff without warning and without consultation.
It appears that P&O assumed they could simply buy-off the risk arising from their failure to comply with statutory requirements by making settlement payments, when they made hundreds of staff redundant and replaced them with foreign contract workers paid well-below the minimum wage.
In employment law terms, the use of settlement or compromise agreements is commonplace. Pro-actively avoiding the cost of tribunal and court hearings by using alternative methods of dispute resolution, including through settlement, is a litigation pre-requisite. If P&O felt that consultation could have taken months, would have led to strike action bringing the organisation to a halt and have required considerable employee compensation payments in any event, the case for settlement payments will have seemed compelling.
As the P&O affair has made clear, however, a settlement agreement is not always the right starting point. Firstly, you cannot force someone to compromise statutory claims: even if an employee is offered more money than they could be awarded by a tribunal they may decide not to accept the offer. Secondly, there may be regulatory or ethical reasons why looking to buy-off the risk of claims is inappropriate in a particular context.
Situations requiring close attention include the following:
Departures involving allegations of sexual misconduct
Historically, allegations of sexual misconduct in the workplace were often swept under the carpet by “exiting” complainants, using compromise agreements which included stringent non-disclosure provisions. This meant that a perpetrator might remain in the workplace while a victim was silenced. Since Weinstein and #MeToo this practice has been the subject of intense scrutiny. The House of Commons’ Women and Equalities Committee reported on the issue in 2018.
The Committee demanded that contractual confidentiality provisions needed to be transparent and balanced and could not attempt to block a person’s right to report sexual misconduct to the police and regulators. The Solicitors Regulation Authority (or “SRA”) of England and Wales similarly issued a warning notice on the use of non-disclosure agreements in this context, demonstrating that the environment has changed dramatically.
Allegations of impropriety in regulated industries
As an offshore financial centre, Jersey is the subject of international monitoring by third party bodies such as MONEYVAL as well as benefitting from the guidance of the Jersey Financial Services Commission (the “JFSC”) and local regulation. In this context, transparency is all. “Compromising out” wayward practitioners is unlikely to be acceptable to the JFSC which will want to know that wrongdoing has been properly investigated and addressed, not rewarded with a golden good-bye.
Large scale redundancies like the P&O situation
As in the UK, in Jersey there are a range of statutory measures in place which are intended to protect employees in the P&O situation. Again, as in the UK, an employer may look to circumvent these arrangements by offering financial compensation to employees as an alternative to working through potentially thorny and time-consuming redundancy procedures. Where a large number of people are affected, employees are long-serving and socio-economic factors are material (such as lower incomes and the impact on the immediate locality of job losses) it is misguided to assume that labour law requirements can be side-stepped by throwing money around.
Dismissals detailed in published or disclosable accounts
The public sector, charitable organisations and listed companies will need to bear in mind that information about employee departures and settlement payments may be disclosable in response to freedom of information requests, to the Charity Commissioner or to the public via company accounts.
An organisation in dire financial circumstances may need to make difficult decisions and do so promptly. Sometimes trying to settle your way out of a crisis means sailing too close to the wind and a change of tack is required.
Viberts provide advice on all aspects of Jersey law including redundancy, unfair dismissal, industrial disputes, offshore employment and Tribunal and Royal Court action.