Veale Wasborough Vizards
17 JUL 2017
Are You Clear on the Obligation to Collectively Consult?
Senior Associate, Veale Wasbrough Vizards
The Employment Appeal Tribunal (EPA) was asked to consider the territorial scope of an employer's obligation to collectively consult employees at risk of redundancy in the recent case of Seahorse Maritime Limited v Nautilus International.
This case provides useful clarification of the factors the tribunal will take into consideration when determining jurisdiction in relation to the obligation to collectively consult. Focus will be on the employees' connection to the UK, in the same way jurisdiction for unfair dismissal protection is decided.
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What Happened in this Case?Seahorse Maritime Limited (SH), a company incorporated in Guernsey, employed crew of different nationalities to work on a fleet of specialist ships owned and operated by Sealion Shipping Limited (Sealion). The crew's employment contracts did not allocate them to a particular ship, but they tended to return to the same ship for every assignment. Most of the ships were stationary and did not travel outside of the jurisdiction in which they were based, although some did move around from time to time. The crew worked under contracts of employment administered by a UK-based company as SH's agent and expressed to be governed by English law.
In 2015, Sealion ceased operating four UK-based ships and this resulted in a number of redundancies. Although the managers of each ship were informed that their crews were at risk of redundancy, a full collective consultation process was not carried out. Nautilus International (NI), a trade union representing many of SH’s employees, subsequently brought a claim in the employment tribunal. It argued that all affected UK-domiciled crew were entitled to a protective award (up to 13 weeks uncapped pay) for SH's failure to collectively consult its employees.
The tribunal upheld the claim. It found that the four ships constituted one establishment and that the combined number of employees at risk of dismissal within that establishment triggered the obligation for SH to collectively consult. The tribunal also determined that the territorial scope of collectively consultation obligation was determined not by the connection between the establishment and the UK, but by the connection between the employees themselves and the UK. Relying on previous case law on peripatetic employees (those who travelfrequently in particular working or based in various places for relatively short periods), it found there to be a sufficient connection between the employees and the UK for the tribunal to try the case.
SH appealed the tribunal's decision on jurisdiction.
DecisionThe EAT dismissed the appeal. However, it was less than convinced by the tribunal's reasoning that SH's UK-domiciled employees were peripatetic. It held that the vast majority of employees worked on ships which were stationary and as such they performed their duties in one location. The EAT described them as 'international commuters' who were domiciled in the UK, employed on contracts governed by English law and who were essentially managed by the UK-based agent of SH. The EAT was not swayed by the fact that SH was registered in the Channel Islands and found that its employees had a sufficiently strong connection with the UK to give the tribunal territorial jurisdiction to hear the claim and grant a protective award.
Best PracticeWhen determining whether an employee has a sufficient connection to the UK and UK employment law, key factors will include: whether they permanently reside in the UK (albeit they may perform work overseas), the law governing their contract of employment and the level of travel they undertake ie are they essentially a 'commuter' between the UK and their place of work or do they travel more widely to undertake their duties in multiple jurisdictions.
It is important to note that each case will turn on its own facts but an audit of the working arrangements of all staff working overseas will assist in understanding and managing risks associated with collective consultation on redundancies and other UK employment law claims.