P&O Ferries: New legislation could lead to closure of business and loss of 2,000 jobs Business News

New legislation to be introduced by the government this week could lead to the closure of P&O Ferries and affect international routes operated by other companies.

P&O laid off 800 sailors on March 17, intending to replace them with cheaper agency staff. The company has repeatedly said the decision – which violated consultation rules on job cuts – was the only alternative to closing.

Transport Secretary Grant Shapps is expected to tell P&O Ferries chief executive Peter Hebblethwaite today to rehire the made redundant staff.

Last week, Mr Shapps said: ‘We’re going to make sure P&O has to turn around on this.

But the ferry business boss has repeatedly said the business has lost £100m in a year – a rate of £3 a second – and will close unless it can reduce its cost base.

Mr Hebblethwaite told MPs last week: ‘We weren’t viable before, and I know that if we hadn’t made sweeping changes the business would have closed.

“It wouldn’t have been 800 layoffs with substantial severance packages, it would have been 3,000 people losing their jobs.”

He said the average salary for agency staff is £5.50 per hour. The rate is 42% below the national minimum hourly wage of £9.50, which takes effect on April 1.

Currently, P&O Ferries, whose parent company is Dubai’s DP World, is losing £1million a day. No vessels sail on the main routes between Dover and Calais and between Cairnryan and Larne. On this last route, one of the two P&O vessels was held up in the port of Larne for security reasons.

P&O Ferries is expected to resume crossings between Scottish and Northern Irish ports imminently, as well as on the Hull-Rotterdam route. It already operates between Liverpool and Dublin – a route provided by agency staff at a lower cost.

Any closure would lead to more than 2,000 additional job losses and a sharp reduction in capacity for passengers and freight before Easter.

Ministers will introduce legislation this week requiring ferry companies serving UK ports to pay seafarers at least the national minimum wage.

It would force Irish Ferries – whose crew are employed on agency contracts – to raise their wages on ships from Dover to Calais – as well as two routes to Ireland, Holyhead-Dublin and Pembroke with Rosslare.

Low-cost competition from Irish Ferries was raised as a concern with Mr Shapps by the chief executive of DP World at a meeting in Dubai last November.

Many other shipping companies, including cruise lines, will be required to pay crew at least £9.50 per hour while in UK waters and ports.

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

This will particularly affect companies such as Southampton-based P&O Cruises, which has no connection with the ferry company.

The standard business model in the cruise industry is to employ agency staff at rates below the minimum wage in many countries.

The Independent asked the Department for Transport what arrangements the government would make to help P&O Ferries’ more than 2,000 existing employees if the business were to close, as well as for passengers and freight on the affected routes.