After two years of financial turmoil, ferry company P&O made 800 staff redundant a few weeks ago amongst outrage, after hundreds of staff were told via a video clip that, “due to a massive financial black hole, they were being sacked immediately, to be replaced with cheaper agency staff.”

P&O said it was a “tough” decision, but it would “not be a viable business” without the changes. However, the excuses haven’t dampened the furious backlash from many corners, whether it’s from ex-employees themselves, union bosses or MPs who scathingly criticised the company, not just for the decision itself, but the way in which it was communicated – via a video call, and apparently without any prior staff consultation process.

Below are some of the lessons all Companies should learn from P&O’s sacking scandal.

Compassion is key

I can often be heard saying “it’s not what you have to do, it’s how you do it that counts. “ We all know that there are often difficult decisions to make  in business and you know that when you make these decisions, you have to factor in how you will communicate it, because get this bit wrong and the whole process of making redundancies can go pear shaped and very quickly, as P & O have found out!

Adam Pennington, Senior Associate Solicitor specialising in employment law at Stephensons, said the news from P&O “underlines the stark reality for many companies who are still reeling from the impact of the pandemic. The decision to make 800 staff redundant with immediate effect is, quite understandably, devastating for the employees affected and the wider business as a whole. It could also be said that compassion and empathy must also come high on the list of priorities when communicating something of this nature and this is something which isn’t immediately obvious in this case given the way staff appear to have been informed.”

Reputational damage may irreparable

Chris Deeley, Solicitor in the employment team at JMW Solicitors issued a warning to any firm considering following P&O’s methods in a bid to save money on staff consultation meetings. “It is natural that other businesses will look at the course of action taken by P&O Ferries this week and might consider taking similar steps to save costs and avoid a lengthy consultation process,” he said.

“However, P&O’s actions – committing what appear to be flagrant breaches of employment law, and simply paying off employees to overlook them – is not an example we would advise any employer to follow. Not only will the cost of enhanced severance packages be incredibly expensive, but there will also be reputational damage to the business and the brand as we are seeing first hand. That type of impact on a business is often immeasurable and long lasting. Substantial ill-will and low morale among remaining employees is highly likely and attracting future staff (not to mention customers) will be significantly harder with this stain upon P&O’s name.”

How to handle redundancies the right way

P&O’s decision to sack its 800 employees via a short, pre-recorded clip was, understandably, widely condemned, with “disgusting” and “callous” being among the most commonly used descriptors. The move mirrored a similar incident which occurred in the US just weeks before Christmas, when mortgage firm Better.com CEO Vishal Garg held a Zoom call to tell 900 staff they had been terminated with immediate effect.

At the time, Garg’s decision to let go of employees in this manner was criticised by many. One of those critics was Ann Francke, Chief Executive of the UK’s Chartered Management Institute, who told the BBC’s Today Programme: “Bad managers will fire people badly whether virtually or in person. But the callous way this was conducted was just magnified by the fact that it was done in this sort of virtual and quite callous style.”

Make sure you work with an HR professional to plan the potential redundancies properly and that the plan includes consultation meetings where possible. These consultation meetings give people time to adjust to the fact that they may be losing their role, ask any questions that they may have, and the chances are that although they won’t be happy that they are going, at least they will have been treated with respect and dignity.

When telling people that their roles are at risk of redundancy, it costs nothing to say how sorry you are to lose the employee, confirm everything possible was done to avoid ending their termination, confirm you will consider them for future employment if anything changes, offer a reference with ‘warm words’, it doesn’t affect your liability to say “we wish Sarah every success in future and we were very sorry to lose her from our team”. And finally – how about doing it in person where possible? We are all allowed to meet in person now, so do so where you can!

If you need to make redundancies or re-structure a team or the whole business, its so important to get it right, as the cost implications of getting it wrong can be huge. If you need some expert help in this area, then please don’t hesitate to get in touch; hello@www.merakihr.com or book a call with us to discuss how we can help