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The Supreme court has ruled that the obligation to collectively consult, applied to the closure of a US military base in Hampshire and therefore to a foreign state. However, the matter has returned to the Court of Appeal for a determination on the uncertain question of when the obligation is triggered.
The duty to collectively consult
An employer must collectively consult with representatives of affected employees if it proposes to dismiss as redundant 20 or more employees within a period of 90 days or less, under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which implements the EU Collective Redundancies Directives (the Directive).
In USA v Nolan the USA decided to close a watercraft repair centre in Hampshire in the UK which was run by the US army in 2006. Whilst management consulted with the 200 civilian employees on their impending redundancy dismissals, this consultation took place after the decision had been made to close the centre. No consultation had taken place on the closure decision itself.
Mrs Nolan, a civilian budget assistant, brought Employment Tribunal proceedings for the failure to consult on the decision to close the centre. The claim was successful and the Employment Tribunal made a protective award of 30 days' pay. This decision was upheld on appeal to the Employment Appeal Tribunal and eventually made its way to the Supreme Court in front of whom the USA argued that foreign states should be exempted from the duty to collectively consult under TULRCA.
The Supreme Court dismissed the USA's appeal and held that there was no exemption from TULRCA for foreign states acting in their sovereign capacity. Furthermore, the Supreme Court held that whilst the Directive specifically exempts 'public administrative bodies [and] establishments governed by public law' from complying with the duty to collectively consult, this exemption was not mirrored in TULRCA and there was no requirement to apply to exemption in this case.
When does the duty to collectively consult arise?
The case will now return to the Court of Appeal for a determination on when the duty to collectively consult arises. The Court of Appeal previously sought to refer this question to the European Court of Justice (ECJ) for guidance only but the ECJ declined to answer the question on the basis that it did not have jurisdiction.
The Court of Appeal will now consider whether the duty arose before the strategic decision to close the base was taken (in which case the USA is in breach of TULRCA) or after that decision had been reached (in which case the USA will have satisfied its obligations).
The case is a reminder that the collective redundancy consultation obligations under TULRCA apply to public administrative bodies, and confirms that the obligations extend to foreign states (albeit that foreign states can argue state immunity to avoid liability).
The Court of Appeal's awaited decision will be of more practical significance to employers on a day-to-day basis. In the meantime, we would generally advise consulting with employees on strategic decisions that will lead to redundancy proposals. This cautious approach may however may subject to revision depending upon the approach taken by the Court of Appeal.