July 10, 2017

International collective redundancies: how far does UK employment law stretch?

In the latest case to consider offshore or maritime workers, the Employment Appeal Tribunal has for the first time considered the territorial scope of UK collective redundancy consultation rights.

In our previous update we considered the question of whether a German employee, living in Germany and working off the coast of Nigeria for a company in Aberdeen under a contract governed by UK law could claim unfair dismissal or discrimination in the UK.  The answer was no as he did not have a sufficiently close connection with the UK – one of the principles set out in Lawson v Serco case in 2006.

In Seahorse Maritime Limited v Nautilus International (a trade union) the Employment Appeal Tribunal (EAT) considered the application of these jurisdiction rules to an employer's obligation to inform and consult with employees when proposing to dismiss 20 or more employees as redundant at an establishment within a 90 day period. 

An employer, who fails to comply with the appropriate information and consultation obligations, may be ordered to pay each employee a protective award of up to one week’s pay for each week of the 90 day period.  This can be very expensive for employers.  The affected employees or their unions or representatives can bring a claim in an Employment Tribunal.   

Seahorse, a Guernsey registered company, employed crew which it supplied to specialist ships owned and operated by other companies. A UK company dealt with employee administration.  The crew were stationed all over the world (mainly at a fixed locations, such as static oil rigs) for 4-6 weeks at a time. The crew who were UK domiciled would return home at the end of each trip, but then tended to return to the same vessels in the same locations.  Nautilus was the trade union that had collective bargaining rights in respect of the employees.

Four ships were taken out of service, meaning that the crew working on those ships would no longer be needed. More than 20 crew members were made redundant without following collective consultation rules, so Nautilus, the union, brought claims in the employment tribunal for protective awards for failure to inform and consult with the UK domiciled employees. 

A key question for the tribunal was whether these employees were entitled to claim protection from UK law. In a previous case, the Supreme Court had concluded that where such an employee’s place of work is not Great Britain, the court had to evaluate whether the employee had a strong enough connection with Great Britain to gain protection from its laws. 

The tribunal found that the UK domiciled employees did have a strong enough connection and therefore did have the right to be informed and consulted about the redundancies.

However, the redundancies were over 4 different ships and less than 20 crew members would be lost on each ship.  This raised the question as to whether each ship was a separate "establishment", so that the obligation to inform and consult, which is triggered when dismissing "as redundant 20 or more employees at one establishment" within a 90 day period, could be avoided. The tribunal concluded that all of the ships in the fleet had to be considered together, forming one establishment as although generically, individual ships are capable of being establishments, in this case, each ship could not be said to be a distinct part of Seahorse’s undertaking.  The tribunal also took into consideration the fact that:

-some employees were not attached to a particular vessel and transferred between them; and

-the UK administrator treated the employees as a group rather than in relation to each ship.

Appeal to the Employment Appeal Tribunal (EAT)

Seahorse Maritime appealed, but the EAT agreed that the tribunal had taken the correct approach in deciding the appropriate establishment.

The EAT went on to consider whether the employees could benefit from collective consultation rights.  The judge could see no reason for making a distinction between collective and individual redundancy rights (although where the union is recognised as here, the remedy is pursued not by individuals but by the union) and confirmed that the territorial reach applicable to individual redundancy rights was applicable to collective redundancy rights as well.

The judge was less convinced about the tribunal’s conclusion that the employees were ‘peripatetic’ ie moved location from time to time, as the employees were mostly working on static platforms, which they returned to each time they worked at sea.  Instead, the judge thought that the employees were more like "international commuters".  Factors that the judge found relevant included:

-The employees were domiciled in the UK

-Their employment contracts were stated to be governed by English law

-Seahorse used a UK registered company to manage the employees.

Practical Points

This case clarifies that, depending on the facts, individual employees working outside the UK who have a sufficiently strong connection with the UK, may have the right to be consulted if their employer proposes to dismiss as redundant 20 or more employees at any one establishment, anywhere in the world, within a 90 day period. 

As we have pointed out previously when considering whether an employee will have jurisdiction to bring an employment claim in the UK, the most important factor is whether the employee has ‘a strong connection to Great Britain’.   Recent cases have shown that this is very fact sensitive and may be difficult to for employers to predict. 

Where, despite working outside Great Britain, an employee is domiciled in the UK and works for the benefit of a UK company governed by English law, then it appears likely that the employee will be able to show that sufficient connection and benefit from UK employment laws.  But the issue can be highly fact dependent;  the law is constantly developing and it is understood that the EAT has given the employers permission to appeal to the Court of Appeal.

Employers should consider this risk factor when planning their operations initially or making workforce changes and take appropriate advice.

Seahorse Maritime Ltd v Nautilus International (A Trade Union) UKEAT/0281/16/LA