An interesting authority on single establishments and the duty to collectively consult in the event of redundancies.

The recent authority in Seahorse Maritime Limited -v- Nautilus International 2018, the Court of Appeal considered the definition of a single establishment and also the territorial scope on the duty of collective consultation.   This is a mandatory requirement under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C )A)

Under these Regulations employers are required to inform and consult where they propose to make 20 or more employees redundant at one establishment within a period of 90 days.

This is an interesting case because it dealt with the issue of UK jurisdiction and also whether Seahorse was one establishment or whether the individual ships were.  These points were appealed successfully.

The Facts of the case

The Appellant – Seahorse employed a crew to work on a fleet of oil rig support ships that were operated by another entity called Sealion.   Most of these ships operated outside UK territorial waters.

Unfortunately, there was a downturn in the oil industry back in 2015 resulting in insufficient charters for many of these ships.  Consequently, various  redundancies were made from the workforce, but no collective consultation was implemented or took place.

The Trade Union Nautilus International representing the redundant employees issued employment tribunal proceedings seeking protective awards for a failure to collectively consult under TULR(C )A which would have resulted in awards of up to 13 weeks’ pay per employee.

Seahorse defended the claims by asserting that there were no jurisdictional ground to bring these claims as the employees were not UK based.  They also argued that each ship was a separate establishment and that therefore the threshold of 20 redundancies at any one establishment was had not been met, notwithstanding that there were more than 20 employees that were made redundant across the workforce.

The outcome

Both the Employment Tribunal and the Employment Appeal Tribunal both upheld the employees claims and held that the ships were not separate establishments and that their employees had a sufficiently strong connection to the UK and consequently Section 188 of TULR(C )A applied.

Interestingly it was also held that each ship was not a distinct unit of Seahorse’s undertaking and that the employees were ‘international commuters.  This was on the basis that the employment contracts were stated to be governed by English law combined with the fact that the employer used a British registered company to manage its employees and it was held that their duties started as soon as they left home and included travelling to the ships.

The Court of Appeal reversed the decision and held that the employees were assigned to particular individual ships which were self-contained operating units which in turn were each an individual establishment.  It was also held that there was not a significant connection with the Great Britain.

In its findings the Court of Appeal noted that the obligation to consult collectively under Section 188 sat at collective level and that it was necessary to focus on the one common feature which defined the Group – which was the establishment.  In this case it was the individual ships.

Accordingly, it was held that each ship was a separate establishment and that there was insufficient connection to Great Britain to trigger any obligation under Section 188 TULR(C)A.

The important points to gauge from the case are that ships can constitute separate establishments for the purpose of Section 188 similarly to a chain of retail shops, as long as the employees are assigned to a specific ship.    It is also clear from the authority that it is the connection that the establishment has with Great Britain as opposed to the connection any individual may have.

Seahorse Maritime Limited -v- Nautilus International 2018 EWCA Civ 2789

If you have any questions relating to individual or collective redundancies affecting your business then contact Steven Eckett, Partner and Head of Employment at Meaby & Co LLP or 020 7703 5034