What do we know about P&O Ferries and how will shipping change?

Sailors on several ferries sailing to and from the UK, as well as sailors on cruises serving UK ports, are set to receive pay rises when the government changes the Crew Pay Act next week.

A week ago, P&O Ferries suddenly laid off 800 crew members, planning to replace them with cheaper labour.

But Transport Secretary Grant Shapps said: ‘We’re going to make sure P&O has to turn around on this. He promised that shipping companies should pay seafarers at least the national minimum wage, and the Prime Minister indicated that this would apply to all seafarers on ships in British waters.

These are the main questions and answers.

What is the background?

In June 2021, Irish Ferries started sailing between Dover and Calais. This is the main route operated by P&O Ferries and also served by DFDS.

Irish Ferries’ business model uses cheap agency labor. It could therefore undercut P&O Ferries, especially for freight. For many months freight has been the main source of income, due to the coronavirus pandemic and restrictions such as the UK government’s ‘amber plus’ quarantine order at the height of summer 2021.

P&O Ferries claims to have lost £100million over the course of a year, which equates to £3 per second. The company employs cheap agency labor on its Liverpool-Dublin route. But the crews of Dover-Calais, Hull-Rotterdam and Cairnryan-Larne were paid at rates agreed with the two unions concerned: Nautilus International, representing the officers, and the RMT union for the other crews.

The ferry company is owned by Dubai-based DP World. During a meeting in Dubai in November 2021, Chairman and Chief Executive Sultan Ahmed bin Sulayem discussed the “challenges” facing P&O Ferries with Transport Secretary Grant Shapps.

He said: “When it comes to our ferry business, there is a new low cost competitor from Irish Ferries.

“This poses challenges for P&O operations. We kept ferries running during the height of the pandemic to support the movement of people and goods. »

The transport secretary replied: “I am aware of the problems with P&O. I recognize that you will have to make trading decisions, but please keep us informed.

What happened next ?

On Wednesday March 16, 2022, P&O Ferries told the Department for Transport (DfT) that it intended to lay off its UK-based crew – totaling around 800 workers – the following morning.

The next day, operations cease. The crew were told to moor their ships and wait for a “major announcement”. Shortly after 11 a.m., many of them were informed by video call that they had been made redundant with immediate effect, to be replaced by cheaper interim labour.

The RMT union says the two agencies are Cyprus-based Columbia Shipmanagement and Glasgow-based Clyde Marine Recruitment. The latter states on its website: “We are Europe’s leading maritime personnel provider, specializing in maritime recruitment and bespoke crew management with offices in the UK, Poland and Latvia.”

Has P&O Ferries explained its action?

Yes. The company’s chief executive, Peter Hebblethwaite, said: ‘We have thought long and hard about how to achieve this. We considered all the options available to us and concluded that every option available to us would result in the closure of P&O.

He said the new crew model “is a fundamentally different operating model, and no union could accept our proposal.”

He said that “£36.5 million is, in our view, the largest maritime settlement agreement in history”.

Was the collective dismissal legal?

It’s not clear. P&O Ferries vessels are registered in Cyprus, Bermuda and the Bahamas, and staff are paid by companies based in Jersey.

A solicitor, Andrew Burns QC, told MPs: “The law requires any employer considering large-scale redundancies to give two things: first, give notice to the Secretary of State; and, second, to consult the appropriate representatives.

“There is a specific provision for employers who have employees on vessels flying the flag of countries other than the UK, namely that 45 days before the first dismissal, the company must give notice to the competent authority of the country where the vessel is reported.

This seems to have been done only on March 17, the day of the mass sacking.

Mr Burns said: ‘What makes this case unusual is not the contracting out, but the contracting out without notice and letting everyone know the same day.’

Alan Bogg, professor of employment law at the University of Bristol, said: ‘The employer can calculate in advance what their financial liabilities will be and then they can effectively circumvent the rule of law by offering compensation packages that go beyond what legal remedies would be.

Are the new crews safe?

No, according to the unions, but yes according to UK Maritime Services – who are responsible for signing ships.

Mark Dickinson of Nautilus International, which represents the officers, said: “In Dover and Calais you run passenger and cargo ships on the busiest shipping lane in the world. And you basically cross it at a right angle. That’s how it works.

“This is an incredibly dangerous situation, and you need competent, qualified and experienced maritime professionals.

“They do 10 crossings a day, and they do 12 hours a day.”

He said P&O Ferries wanted the crew to stay on board for two weeks at a time. At present, the system works one week, one week off.

“It could take months, not days, to prepare a crew to operate these vessels safely,” Mr Dickinson said.

Mick Lynch, general secretary of the RMT union, said: “I don’t believe P&O will operate these vessels safely.”

But Katy Ware, director of UK Maritime Services, said: ‘You have my absolute assurance that we will go into great detail to ensure that those crew on board are familiar, qualified, trained and that we are confident they can operate these vessels safely. .”

Of time on board, she said: ‘You could have a crew on board for up to six months; It’s allowed. The main thing here is to ensure that these crews have the hours of rest required by law.

What happens next?

The Transport Secretary has pledged to reverse the business model used on several ferry routes between the UK and European Union destinations, with companies ordered to pay at least the national minimum wage.

Talk to BBC todayGrant Shapps said: ‘There shouldn’t be any difference when you’re down to be in, you know, there’s an economic exclusion zone around the UK, 12 miles, if you’re plying your trade regularly , like P&O and any other ferry company, between two ports, round trip, you shouldn’t be able to avoid paying minimum wage.

Assuming a current pay rate of £5.50 per hour, as P&O Ferries chief executive Peter Hebblethwaite told MPs, a move to the national minimum wage of £8.91 would represent an immediate 62 per cent increase . This would presumably be passed on to customers.

Could this affect cruise lines?

Yes. On March 23, the Prime Minister told Parliament: “We will take action to protect all seafarers working in British waters and to ensure that they receive a living wage.”

While cruise passengers spend much of their time outside UK waters, many ships are based in UK ports. Boris Johnson has indicated that all seafarers must be paid at least the legal minimum to work on land. This will no doubt be welcomed by crew, but will increase costs for cruise lines – and, ultimately, passengers.

It seems to have started with Irish Ferries. What does the company say?

The Independent asked Irish Ferries for details of its crewing arrangements.

We were told: “Irish Ferries cannot comment on this.”