Buck Bond Group
Caught between the devil and the deep blue sea

Caught between the devil and the deep blue sea

by Tags:

Most people I know were shocked by the decision of P&O Ferries to dismiss 800 seafarers. The rationale put forward was that the action was the ‘least worst’ option, with the alternative being a company collapse and the loss of 2200 jobs.

That’s not all of it. Hats off to the MNRPF Trustee and Trustee Chair, John Oldland, for immediately highlighting the corollary issue. P&O Ferries has around a £150m deficit in the Merchant Navy Ratings Pension Fund. This fund, an industry-wide fund, and its sister fund (the MNOPF), are categorised as last man standing non-associated multi-employer schemes. What does this mean? It means that any deficit unpaid due to the insolvency of an employer falls on the remaining employers (that are, in some cases, in competition with each other.)

The MNRPF has an interesting history. In 2010, the High Court found in favour of Stena Line in a case that resulted in many employers who believed they had discharged their obligations to the MNRPF being brought back into the fold assuming, in some instances, a multi-million pound obligation in respect of orphaned liabilities.

Should P&O reinstate the 800 as they have been asked to do, and ultimately if P&O Ferries were to collapse, then not just 2200 hundred jobs are threatened, but also many others across the industry as the additional funding burden falling on MNRPF employers would exacerbate the already tough trading conditions that face the shipping industry.

As John Oldland states, the only way to really square the circle, should P&O Ferries reverse its action, is to get money from a source other than the already beleaguered remaining employers. This could be from P&O’s very well resourced, but overseas domiciled parent, DP World, or from the government (i.e. the U.K. taxpayer).

A difficult decision indeed, where a change of mind could have severe consequences if not managed extremely carefully. Let’s hope the Regulator and the government are able to navigate these choppy waters.