Governance, Law and Ethics

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TASK 1 

P&O Ferries Case, 2022

As per the facts of the P&O Ferries case, it was found that the firm laid off 800 maritime workers because it was losing about £100 million annually.  This Dubai-based business declared that it was unable to recuperate the recent loss (Lawrence, 2022).  The corporation has made the decision to remove a large number of its personnel from the organisation in order to make up for the losses.  It is the process via which the corporation fires departing employees and hires new ones.  However, it has been noted that the employees were fired from their current positions without providing them with any notice.  According to the legislation, the primary duty to communicate with employees before firing 20 or more workers within 90 days is outlined in Section 188 of the Trade Union and Labour Relations Act, 1992. By giving them the settlement agreement, the P&O Ferries Company has given the workers compensation packages and, in the end, prevented them from pursuing any more legal action against the business (Navigating Choppy Waters: The P&O Ferries mass redundancy case and its implications for UK labour law, 2024).

Figure 1:  P&O Ferries scandal

Furthermore, in accordance with Section 98(2)(c) of the Employment Rights Act of 1996, the employer must give a cause for the employee's termination.  However, since the company is experiencing yearly losses and is unable to control its spending, redundancy is regarded as a legitimate reason for firing an employee. Nonetheless, the business needs to present the declaration pertaining to the yearly losses (Devereux, 2024). When an employee is fired from their position, they should be informed of the justification for their termination.  In accordance with employment legislation, employers are required to provide a reasonable explanation; if no explanation is provided, the employer is not permitted to terminate an employee without cause, which is illegal.  When an employee is dismissed without a valid reason and without giving him a chance to be heard, this is known as an unfair dismissal (Wiley Wasieleski and Weber, 2019). Additionally, every employee has the right to receive fair compensation without any restrictions under the Payment of Wage Act of 1936.

 According to the case study's findings, P&O Ferries Ltd. breached employment law rules by implementing collective redundancy.  Employees were wrongfully fired by the corporation, and the employer also violated the rule requiring notice before firing workers. According to Section 188 of the Trade Union and Labour Relations Act of 1992 and the Employment Rights Act of 1996, if employer fires more than 100 workers, they must give them 45 days' notice.  In this instance, 800 workers are being wrongfully let go without providing a warning period.  According to international standards, the business must alert staff members about the possibility of redundancy in advance.

Stratton Oakmont, Inc. Case

Stratton Oakmont Inc. was a stock brokerage company that was located in New York which had a favorable reputation in the financial markets throughout the late 1980s and up to the early 1990s. However, it should be indicated that the activities of the company, which belongs to the firm's founders Jordan Belfort and Danny Porush, were based on the use of a ‘pump and dump' scheme. Stratton Oakmont employed aggressive pressure to persuade members of the public to invest in certain stocks which mainly had no value in the market. Penny stocks and speculative securities were mainly targeted to give the firm a false impression that there is demand through artificial inflation of the price. After the price rise was performed, the firm's brokers would then take advantage to sell their own stocks at such inflated prices which when the market was next manipulated downwards left the investors with their over-hyped stocks.

Figure 2: Stratton Oakmont, Inc. vs Prodigy Services Co. case

The brokers working at Stratton Oakmont engaged in pertaining sales-pitching and passed false information to the clients especially those who had no prior experience with the trade. Employing such tactics, the firm was able to make millions in its revenues; however, its clients lost their money through fraudulent means (Mensah, Arhinful and Owusu-Sarfo, 2024). The firm was finally investigated by the Securities and Exchange Commission (SEC) which forced its shutdown in 1996 (Arts, 2022). Jordan Belfort the founder of the firm was later captured for securities fraud and money laundering in 1999, although he was convicted, he was sentenced to 4 years but he only served for 22 months. He was also required to forfeit $110.4 million as the restitution to the defrauded investors. However, the case of Stratton Oakmont gained fame and was depicted in the 2013 movie. The Wolf of Wall Street which though depicted the luxurious way of life of the company and its wrong doings. The main theme of the case revolves around the issue of stock market manipulation and the need for regulation in addressing such matters.

According to the Article 10 of the European Human Rights Commission states that everyone has the fundamental right to free speech and expression.  People can freely express their opinions and thoughts using these rights, but they should be supported by some acceptable limitations.  Individuals have an obligation to behave responsibly and to respect the rights of others.  Additionally, the following list includes some appropriate restrictions:

Obscenity and Indecency:  In the Alliance for Community Media v. FCC [1995] case, the court determined that, in accordance with Sections 10(a) and 10(c) of the Cable Television Consumer and Protection Act, 1992, obscenity and child pornography appear to be forbidden on a number of public channels.  The right to free speech and expression cannot be granted in this situation since the government has the power to prevent the channel from broadcasting it on a public platform.

Defamation: Spreading untrue information about an individual that harms another person's reputation is known as defamation.  In this situation, a person has the right to sue the individual who made the false statement with malicious intent.  The claimant must demonstrate that there was malicious intent in order to prove the defamation claim.  The defamation law's primary goals are to defend the public, maintain national security, and protect the rights and reputation of others.

Individual rights, particularly the right to free speech and expression, are protected in Article 19 of the Universal Declaration of Human Rights (UDHR).  Since it safeguards the ruling class, human rights are unalienable and should never be violated.  According to Stratton Oakmont Inc. v. Prodigy Services (1995), the third party in this case is liable because some of the statements were published by them.  It is well known that Prodigy is an internet network service where users can freely express their thoughts and recommendations to a third party.  Subscribers who offer online computer services to a third party are protected by Section 230 of the United Nations Code, which was implemented by the Party Communication Decency Act of 1996 (Halim, 2023).  Members of online service networks are protected by Section 230(c) (1).  But it hasn't been given, and they need to provide safety for Prodigy service consumers.

 

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TASK 2 

Discuss the Governance, Ethics, and Legal Challenges

While carrying out their corporate duties, both business organisations have encountered several governance-related difficulties as well as moral and legal dilemmas (CIMA workbook, 2021).  Below is a discussion of the ethical and governance challenges:

1. Responsibility:Employees become discouraged when operations are not held accountable since they are unable to contribute more to the business.  Therefore, it is the company's duty to uphold higher ethical standards and safeguard employees' rights (Boubaker, 2019). The business shall bear full responsibility for its activities and deeds in the event of any mishap.  Additionally, it is crucial that the business refrain from discriminating on the basis of gender, sex, ethnicity, colour, and other factors. A business may be in violation of the 2010 Equality Act if it discriminates against its employees.
2. Fairness:Treating workers, investors, shareholders, and other stakeholders in a fair and reasonable manner is also crucial for the business.  Equal opportunities for equal effort should be provided, and discrimination on any basis should be forbidden on the property.  The business should comply with the Equal Pay Act of 1970and the Equality Act of 2010 in order to pay its employees equally and without discrimination.
3. Transparency and Responsibility: In order for the public to be informed of the company's activities, the documents must be made publicly available. A firm may violate its obligations and be held accountable if its records are opaque.  In order to ensure that stakeholders are aware of the risks involved as soon as possible, correct information should be presented to the public.

Regarding the P&O Ferries case, 2022

 In this case, the corporation P&O Ferries operates the business in violation of ethical and corporate governance requirements.  It has been noted that the corporation failed to notify the employees in advance of the impending risks, which is a grave infringement of their rights.  It demonstrates the company's lack of operational transparency because they failed to provide adequate notice prior to the dismissal.  As a result, the business has acted irresponsibly and does not adhere to international labour norms.  Additionally, when a company experiences redundancy, it must provide its workers an alternate employment opportunity.  As a result, it can be said that the business has transgressed and is accountable for failing to uphold its internal ethical norms and ideals.

In the context of Stratton Oakmont, Inc. V. Prodigy Services Co.

The Prodigy Services Company has struggled to adhere to ethical and corporate governance requirements.  It is demonstrating that everyone has the freedom to openly share their thoughts and opinions with others (Tuckman, 2021). These days, the corporation offering internet services raises serious concerns about their adherence to ethical and governance standards.  In addition to making a profit, the company's primary goal is to guarantee the well-being of the community. Additionally, the business disregards confidentiality, which increases the possibility of data leaks.  It is also crucial that the business provide protective policies and tools that can eliminate disparaging remarks made by third parties.  By shielding the staff from defamation lawsuits, the business must adhere to ethical norms.  Company Prodigy Service might be held accountable for the actions taken on its internet platform and would not be exempt from ethical accountability.  As an intermediary business, it is the organization's duty to adhere to good governance and refrain from compromising third-party protection.

 Legal issues

• Data protection:In order to ensure that information is kept private and secure, businesses must implement effective data protection measures.  It would be considered a breach of the rights of the people whose data is there if the business did not protect it. The business must preserve an individual's personal information when transmitting it. Tax obligations:  The business is in charge of adhering to all tax requirements.  The business may be subject to penalties and obligations if it does not make its tax payments on time. According to observations, a corporation can lower its risk if it fulfils its tax responsibilities on schedule.  It is crucial that the business adhere to the obligation to pay taxes during certain periods.
• Legal contractsare regarded as significant in the field of law since they bind two parties to one another and are legally enforceable.  It safeguards the rights and responsibilities of the contract's parties and assists the plaintiff party in pursuing claims in the event of a violation.  Nonetheless, businesses must abide by all of the terms and conditions specified in the contract (BPP Macintyre, 2018).
• Employment Law:One of the important laws that safeguards the rights of employees is employment law. It facilitates the preservation of the organization's ties between the employer and employees. The Employment Rights Act of 1996 and the Trade Union and Labour Relations Act of 1992 are two laws that govern employment.

In the context of the case P&O Ferries, 2022

More than 800 employees were wrongfully fired from P&O Ferries Ltd., and the firm is held responsible for this. The Employment Rights Act of 1996 must be followed by the company when an unjust dismissal takes place and a duty is violated in front of workers (Solomon, 2020). However, before terminating employees without cause, the company must give them a notice period. Another critical aspect is promptly informing staff members about risks and conditions.  The workers are also given minimal wages and other forms of employment to help them survive.

P&O Ferries Ltd. has employed the free and rehire strategy to offer certain workers a period of redundancy in order to provide them with job stability (Ellili, 2022). CSR includes a variety of moral commitments that guarantee all companies will operate in an ethically and fairly responsible way.   Nevertheless, P&O Ferries Ltd. cut costs by terminating most of its workers without giving them enough notice. The company must follow moral guidelines on the conduct of its numerous employees, yet it has not fulfilled its ethical duties.

Concerning Stratton Oakmont, Inc. v. Prodigy Services Co.

Prodigy Service is responsible for safeguarding the data and services in compliance with company standards as an intermediary.  However, the company cannot protect the third party from breach of rights of the individual. Although it is essential that they be subject to some reasonable limitations, all employees of the organisation must be able to freely express their opinions.   The company must implement the proper procedures that enable the third party to remove derogatory comments.  Nonetheless, the company must follow the guidelines for data protection and corporate governance. Philanthropic responsibility is one kind of obligation that comprehends how companies function and contribute significantly to the environment and society.  To balance its financial and charitable activities, the company must abide by the law.   Employee wellness should be a higher priority for the company as a whole.

Organisations' Current and Future Social Obligations.

More recently, the corporate social responsibility approach was adopted in the 20th century.   In 1980, the CSR strategy was changed to become a separate organisational role.   Since corporate social responsibility affects internal decision-making, it is imperative that businesses teach their employees about it (Saurabh, Rani and Upadhyay, 2024). The term "corporate social responsibility" is crucial for attracting the company's bright, driven employees.   Businesses promote human resources, marketing, diversity, and inclusion. To best align their vision and objectives, many organisations invest in corporate social responsibility (CSR) activities. "Corporate social responsibility" provides a worldwide viewpoint.  Numerous organisations employing about 500 people can interpret the public's attitude towards climate change.  These companies also implemented CSR programs to maintain the supply chain within the company.   Some companies have taken over the entire global market by providing workers with effective training and education programs that involve the younger generation and potential employees.

The concept of corporate social responsibility (CSR) programs is essential to the development of communities and the expansion of enterprises.  Businesses started employing the forward learning approach to address numerous issues and provide justice to society (Karwowski and Raulinajtys‐Grzybek, 2021). A large number of customers and workers use sustainable business methods.  Reversing the effects of global warming begins with minimising the harm locally.  Technology is essential to the smooth running of the company during COVID-19.  Virtual meetings also make it easier for employees to communicate with one another. Employees besides obtaining legal rights have moral and social rights from organizations that they work for. Ethically, organizations are supposed to respect rights of the employee to dignity and equal worth by avoiding discrimination or prejudice at the workplace. It covers aspects such as promotion, training, and other opportunities for personal development opportunities regardless of the workers' race. The fulfilment of these obligations ensures positive workplace environment, increase organizational commitment, complex and, as a result, long-term staff satisfaction

The term "business ethics" describes the several rules and regulations that control a company's actions, both good and harmful.  A lot of workers base their choices on ethical, religious, and social justice factors. During the decision-making process, many employees are swayed by others and commit misconduct in order to boost company profits.  Acting justly, morally, and enforcing laws that are both effective and remove harmful pollutants from the environment are all given more weight under the concept of corporate social responsibility. Therefore, concerns with the effectiveness in managing the firmware of the interest of shareholders, management, employees, customers and the society. Corporate governance is a set of guidelines that intended to offer a solution to the problem of lack of accountability and corporate social responsibility in an organization. The structure of the board of directors, the features of the shareholders' activity, considerations on the financial reports, and measures on the protection of the stakeholders' interests can be considered as significant aspects of corporate governance.

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CONCLUSION

According to the aforementioned analysis, many commercial organisations must abide by corporate governance regulations since they help them succeed in the long run and get a competitive edge in the marketplace. It has been mentioned that it is the employer's duty to safeguard workers' rights against wrongful termination and dismissal.  The case study covered how CSR is being implemented now and, in the future, as well as the ethical and legal issues that have arisen. Corporate governance therefore addresses the question on how corporations are directed, administered and monitored.

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REFRENCES 

Books and Journals   

Ananzeh, H. (2022). Corporate governance and the quality of CSR disclosure: lessons from an emerging economy. Society and Business Review, 17(2), pp.280-306.

Boubaker, (2019). Corporate Social Responsibility, Ethics and Sustainable Prosperity. Singapore: World Scientific Publishing Company.

CIMA workbook, (2021). Fundamentals of Ethics, Corporate Governance and Law. London:

BPP Macintyre, E. (2018). Essentials of Business Law. Harlow: Pearson.

Devereux, H. (2024). Inequalities of a Global Workforce: The Shipping Industry. In Sociology, Work, and Organisations (pp. 255-266). Routledge.

Ellili, N.O.D. (2022). Impact of environmental, social and governance disclosure on dividend policy: What is the role of corporate governance? Evidence from an emerging market. Corporate Social Responsibility and Environmental Management, 29(5), pp.1396-1413.

Ewing, K.D. (2022). Business and Human Rights: A P&O Ferries Case-Study. International Union Rights, 29(1), pp.16-18.

Halim, R. (2023). Section 230 Reform: A Work in Progress. U. Cent. Fla. Dep't Legal Stud. LJ, 6, p.193.

Karwowski, M. and Raulinajtys‐Grzybek, M. (2021). The application of corporate social responsibility (CSR) actions for mitigation of environmental, social, corporate governance (ESG) and reputational risk in integrated reports. Corporate Social Responsibility and Environmental Management, 28(4), pp.1270-1284.

Lawrence, K. (2022). Britain's P&O Ferries in Hot Water After Illegal Mass Layoffs. SAGE Publications: SAGE Business Cases Originals.

Mensah, L., Arhinful, R. and Owusu-Sarfo, J.S. (2024). Enhancing cash flow management in Ghanaian financial institutions through effective corporate governance practices. Corporate Governance: The International Journal of Business in Society.

Saurabh, K., Rani, N. and Upadhyay, P. (2024). Towards novel blockchain decentralised autonomous organisation (DAO) led corporate governance framework. Technological Forecasting and Social Change, 204, p.123417.

Solomon, J., (2020). Corporate Governance and Accountability, 5th ed. Chichester:

Tuckman, A. (2021). Workplace Occupation in the United Kingdom, 1971-2019: Appendix to Special Issue of Labour History Review. Labour History Review, 86(1), pp.165-185.

Wiley Wasieleski, D. and Weber, J. (2019). Business Ethics. NY: Iabs

ONLINE REFERENCES

Arts, W.J. of L.T.& (2022) Stratton Oakmont v. Prodigy Services: The Case that Spawned Section 230.

Navigating Choppy Waters: The P&O Ferries mass redundancy case and its implications for UK labour law (2024). 

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