Grant Shapps, transport secretary, is to tell P&O Ferries to re-hire the 800 staff it sacked earlier this month, as its plan to replace them with very low-paid workers is doomed because a new law will soon outlaw the practice.
Shapps will tell Peter Hebblethwaite, the company’s chief executive, that new legislation — to be outlined this week — will require all ferry companies operating out of UK ports to pay the national minimum wage.
An aide to the transport secretary said: “He will tell Hebblethwaite that if he doesn’t perform a U-turn, we will force him to do it anyway. We hope they will see reason and step back. We will make it impossible for ferry companies to operate from UK ports without paying the national minimum wage.”
The company, which sacked 800 workers earlier this month without any formal consultation, wants to halve its labour costs by replacing crews with international agency staff on an average hourly rate of £5.50.
Shapps plans to write to Hebblethwaite before outlining his legislative proposal to MPs later this week. He will say that he expects staff to be treated with “decency and respect”.
The legislation will do away with a loophole in UK law by mandating that ferry companies must pay the British statutory minimum wage, whose main rate will rise to £9.50 from April.
Shapps hopes the prospect of the forthcoming legislation will motivate P&O to reinstate many of the workers in their old jobs even before it comes into effect, according to his aide.
The transport secretary is expected to outline his plans to change the law on Wednesday or Thursday, before MPs leave Westminster for a two-week Easter recess.
Last week Shapps pledged to stop a race to the bottom on wages on UK ferry routes. “There are other operators who have been using this model . . . Irish Ferries already went down this route,” he said.
Shapps said his changes would protect “those like Stena and DFDS who are not using this cheap labour, below the minimum wage, model”. Irish Ferries has declined to comment on Shapps’s remarks.
Last week Hebblethwaite admitted that P&O had chosen not to consult on the 800 redundancies — a breach that would leave it open to paying “protective awards” of 90 days pay, on top of redundancy payouts, if taken to a tribunal.
P&O Ferries has effectively offered to pay this upfront as part of a redundancy package that is more generous than the statutory minimum, while also setting a deadline for staff to accept — making it unlikely that crew members would want to run the risk of pursuing legal action.
P&O did not respond to requests for comment.