Brexit and the waning days of the United Kingdom

[Sheilbh]

CEO of P&O just confirmed to a Select Committee that they "chose" to break employment law:

"There's absolutely no doubt we were required to consult with the unions," Mr Hebblethwaite told MPs. "We chose not to do so."

He said they made the decision not to consult unions because they believed "no union would accept" what they were proposing - and that to comply with the law and undergo the process would have been a "sham."

We absolutely need to throw the book at them. It may be that current law doesn't have sufficient punishments because it operates on the basis that companies will follow the law and non-compliance is likely to be limited, I don't know if it has remedies for a company deciding it wouldn't follow the law because it would have been a "sham". If that's the case we need to change the law - and make it retrospective to cover P&O.

I think the consequences of allowing compliance with law to become optional - and you just pay the fine later - are really huge (especially as there are a lot of private equity firms operating in the UK). In particular I don't think a director who's deciding to deliberately choose not to comply with employment law is fulfilling their duties as a director and we should be looking at personal liability.

I think the government's deadlines for answers on this was earlier in the week so we'll see where that goes - but Johnson has said that from his understanding it appears that P&O have broken several laws.

[Josquius]

Yeah, it's pretty amazing.
The best can be said for them is points for honesty, I guess there's some value in not going through bad faith negotiations and then admitting you just chose not to obey the law rather than fighting it in court.
But really does show the consequences clearly aren't strong enough that they felt so able to just ignore the law. This is a problem in a lot of laws governing the powerful - politicians are often guilty of it.

[Sheilbh]

Yeah on the consequences - although I can't think of another example like this. The nearest I can get to is some of the various corporate pension scandals over the year - Arcadia Group for example. But there it's normally that they have been technically compliant but basically used a loophole.

In general companies try to comply with laws - they may make risk decisions around how much a priority one area is (for example you do not want to accidentally end up on the wrong side of US sanctions law). Similarly it might be there's complicated regulation in an area and you might make a risk decision around how to interpret it - or implement other steps to mitigate the risk.

But to just come out and say "we knew we had to do x legally, but we chose not to because it was pointless" is really bold - I can't think of another example off the top of my head. And it sounds like they did try to mitigate it a little bit so there's lots of reports that they've offered "enhanced compensation", which I think means they've probably tried to give workers more than they would have got under a redundancy process. But that's not really the point.

The clip from the Select Committee:
https://twitter.com/BBCPolitics/status/1506963751236423687?s=20&t=3FmifsQIrXKVgT14SXS-Kg

[Josquius]

Most Relevant examples that come to mind for me are the various dodgy funding sources in the brexit ref and other recent elections. Groups chose to just ignore the law as they could afford the 10k fine.

I wonder whether this was some kind of a gamble that the tories would come out for them with an anti Union campaign?

[Admiral Yi]

What law did they not comply with?

[crazy canuck]

What law did they not comply with?

They breached the statutory spending limits for a political campaign. 

Someone tell Yi that because I am sure he has me on ignore.

[Sheilbh]

They breached the statutory spending limits for a political campaign. 

Someone tell Yi that because I am sure he has me on ignore.

Yeah roughly - it was basically over one campaign group giving funds to another campaign group. It's worth noting the courts disagreed on this - the High Court ruled in favour of Vote Leave, the Court of Appeal broadly ruled in favour of the Electoral Commission except on a few points/specifics. Given that, it seems like that falls into the category, which happens with regulations, of something not necessarily being clear and you take a risk decision which you could get wrong.

That to me feels different to saying - "there was absolutely no doubt we should do x, and we chose note to". The only example I can think of and the law has had to change on this, is nuisance marketing - especially spam cold calling and harassing people. That entire industry is based on unlawful use of people's information. But the companies are normally dissolved by the time the regulators issue fines and the exact same set of directors/people have popped up as a new company doing the same thing. In that case they've changed the law to allow the regulators to go after the directors personally and also to bar them from being a company officer.

What law did they not comply with?

Employment laws.

I wonder whether this was some kind of a gamble that the tories would come out for them with an anti Union campaign?

I wonder if part of it is just a "good day to bury bad news" with the attention on Ukraine? I don't think they expected push back from the UK state because the UK state generally is quite pro-employer and pretty supine - I also think they probably thought the relationship with the wider group (which is owned by Dubai) would outweigh any outrage. We're waiting for action - my understanding is the Insolvency Service have been told to finish their investigation into this by 8 April to establish facts and they've said they're working to this - but I believe the government have already called in all other contracts with the wider group and said it "fundamentally alters" their relationship with the UK state so we'll see if anything happens there. They might be quite limited in terms of those contracts but that is definitely a way of making this hurt, which is the key. The cost of doing this needs to vastly outweigh the saving the company was hoping to achieve.

I don't see how any company could expect a mass firing of British workers - many in Tory consituencies like Dover - could result in the government swinging behind them.

[crazy canuck]

Based on what is now being said, they knew that they were likely in contravention but took the risk they would not get caught.

[Admiral Yi]

Employment laws.

Can you be a little more specific?  Or throw me a link?

[Sheilbh]

Can you be a little more specific?  Or throw me a link?

You can't fire people "effective immediately" in the UK without cause. In their video they fired 800 people "effective immediately, by way of redundancy". Redundancy - almost by definition - is a formal process which requires notification, consultation periods, notice, an appeals process or offering alternative employment - and there's pension implications.

There's also a semi-open question on whether they were required to notify the government. In general employers are if they're planning to make more than 45 employees redundant - and the government then has steps it can take - there's a little lack of clarity on this because it might not apply to ships registered overseas. But even if that's the case under UK law if it affects UK employees you are legally required to notify the government of the jurisdiction the ships are registered in (I think it's about 6 weeks notice) - from what we've seen they either notified them on the day or at 8.30 the night before.

It's been a while since I did anything about this but I also think there could be breaches of companies law - I'm not sure how deciding to consciously break the law fits with fiduciary duties. Also there is a softer requirement for directors to "have regard to" things other factors like the company's employees, high standards of business conduct, impact on the community etc.

[Admiral Yi]

Thanks.

My knee jerk pro business defensiveness is not triggered.

[crazy canuck]

Can you be a little more specific?  Or throw me a link?

You can't fire people "effective immediately" in the UK without cause. In their video they fired 800 people "effective immediately, by way of redundancy". Redundancy - almost by definition - is a formal process which requires notification, consultation periods, notice, an appeals process or offering alternative employment - and there's pension implications.

There's also a semi-open question on whether they were required to notify the government. In general employers are if they're planning to make more than 45 employees redundant - and the government then has steps it can take - there's a little lack of clarity on this because it might not apply to ships registered overseas. But even if that's the case under UK law if it affects UK employees you are legally required to notify the government of the jurisdiction the ships are registered in (I think it's about 6 weeks notice) - from what we've seen they either notified them on the day or at 8.30 the night before.

It's been a while since I did anything about this but I also think there could be breaches of companies law - I'm not sure how deciding to consciously break the law fits with fiduciary duties. Also there is a softer requirement for directors to "have regard to" things other factors like the company's employees, high standards of business conduct, impact on the community etc.

It can create personal liability for the directors if minimum statutory requirements are breached.  But a lot of times people choose to whistle past the graveyard on that one.

[The Brain]

Basically they decided to pull a Phil Mickelson.

[Sheilbh]

Feel this is another reason any challenge to Johnson will wait until after the May local elections - Sunak's numbers are not looking great:


Though on a net basis, that means he is still unusually popular for a senior politician


Just watching his media performances around the Spring Statement I'm not convinced - Tory backbenchers thought he might be too green and Labour were betting on it and I think they're probably right. He has a little bit of the "deer in the headlights"/"powerfully trying not to vomit" energy in interviews that used to be Jeremy Hunt's thing - Hunt appears to have got over that though so there's hope for Sunak.

The Ben Wallace numbers are interesting though - I think he's quite convincing and has been competent during the Ukraine crisis and was also, from what I could see, the only person in the cabinet working during the fall of Kabul. He's got low name recognition (63% don't know) but that will rise and I can see Tory backbenchers and members. There was also a piece by Tim Shipman in the Sunday Times a few weeks ago about how Wallace had spent the entire of 2021 pushing to send more arms to Ukraine which had powerful positioning for a leadership bid energy. Not sure if Britain's ready for a bald leader again though - it's been a very long time (since Churchill, I think? ).

[Josquius]

In other union news... Just Eat drivers from around the country marched on Greggs HQ today.

Which is very serious stuff but it still makes me laugh