EAT decides scope of collective consultation for redundancies overseas

In its judgment in Seahorse Maritime Ltd v Nautilus International, the Employment Appeal Tribunal has considered, for the first time, the territorial scope of the duty of collective consultation under  s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A).

Seahorse employed crew to work on a fleet of ships operated by a separate company, Sealion. Most of the ships operated exclusively outside UK territorial waters. Due to a downturn in the oil industry, Sealion could not find charters for many of its ships and laid up a number of them in port. Seahorse made redundancies from among its employees but without going through a full collective consultation process.  

Nautilus International, a trade union representing many of Seahorse’s employees, brought a claim seeking protective awards for failure to collectively consult under s.189 TULR(C)A.  Seahorse defended the claim in part on jurisdictional grounds.  It argued that each ship was a separate establishment such that (save in respect of a few ships) the threshold of 20 redundancies was not met. Further, it argued that only in respect of the few ships based out of Hull, was there the necessary connection between the ship (i.e. the purported establishment) and the UK for TULR(C)A to apply. 

At a preliminary hearing, the employment tribunal found in favour of Nautilus: it found that the the whole fleet of ships constituted one establishment and that the territorial scope of s.188 was determined not by the connection between the establishment at which employees are assigned to work and the UK, but by the connection between the employees themselves and the UK. 

The EAT upheld both parts of the decision.  In respect of the territorial scope of s.188, Slade J based her decision upon the legislative history of the section and the fact that, although the duty to consult is collective, it may ultimately be enforced under s.192 by a claim by an individual employee who has not been paid a protective award.  A tribunal must therefore determine whether there is a sufficiently strong connection between the individual employees concerned and the UK.  The test of 'sufficiently strong connection' is the same as for individual rights such as unfair dismissal (see Ravat v Halliburton).

In practice, this means that an employer is obliged to carry out a collective consultation exercise if, at any one establishment anywhere in the world, it is proposing to dismiss as redundant 20 or more employees within a period of 90 days or less, who each individually have a sufficiently strong connection with the United Kingdom. 

Chris Stone represented Nautilus International, the claimant trade union, in the employment tribunal and EAT. The judgment can be accessed here.

Back to News

Additional Information