Employment unit

The law says that when an employer proposes to dismiss as redundant 20 or more employees at one “establishment”, they have to consult with the appropriate representatives. In Seahorse Maritime Ltd v Nautilus International, the Employment Appeal Tribunal (EAT) held that the territorial scope of the obligation to collectively consult was dependent on the individual employee’s connection to the UK. 

Basic facts 

Seahorse Maritime Ltd, which was registered in Guernsey, employed crew which it supplied to specialist ships owned and operated by other companies all over the world, including vessels operated by Sealion. Most of their ships, which were located outside the UK and European territorial waters, were stationary for periods of time or moved around a particular oilfield.

Seahorse used a UK company as its agent to carry out its administrative work. The contracts of employment between Seahorse and its employees required the crew to work on any of Sealion’s ships. Most tended to stay on the same ship to which they were rostered for a period of four to six weeks although some moved between ships. The contract of employment stated it was governed by English law and was subject to the English jurisdiction. 

Due to a fall in oil prices in 2014/15 Sealion took some ships out of service which meant that the crew was no longer needed. Seahorse’s administrative agent in the UK e-mailed the ships’ masters telling them to inform the crew that they were at risk of redundancy. Nautilus (the recognised trade union) claimed protective awards for those crew based in the UK under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) on the basis that the company had failed to consult with it, contrary to section 188. 

A preliminary hearing determined that there were two key issues to be determined.  First whether the ships or the fleet amounted to an establishment; and secondly whether there was a sufficient connection with the UK for the tribunal to have jurisdiction to determine the claim. 

Tribunal decision 

The tribunal held that, although individual ships could be “establishments”, taking into account that the employees were not assigned to a particular ship, there was evidence that some employees worked on different ships; and the fact that the ships were not owned by Seahorse the whole fleet was a single establishment and therefore the obligation to consult applied. 

As for the issue of jurisdiction, the judge held that there was a sufficiently strong connection between the employees based in the UK and UK employment law for their claims to be heard. 

EAT decision 

Dismissing the company’s appeal, the EAT held that the tribunal had adopted the correct approach for identifying an establishment. The two central questions to be asked were:

• is the postulated unit capable of being an establishment?
• if so, is the employee assigned to it? 
  
  

These were difficult questions to answer when, as here, the employer’s business was just the supply of labour and the employer did not own or operate the unit to which the employee had been sent. However, case law had determined that the relevant establishment had to be the unit within the employer’s organisation to which the redundant employees were assigned. In other words, as the ships were not owned by Seahorse, each ship could not be an establishment for the purposes of collective consultation.

As for the territorial scope of the union’s section 189 claim, the EAT noted that although it imposed an obligation on employers in relation to a group, it was the individual employee who could enforce that right. As such, the tribunal judge was therefore right to focus on the employee’s connection to the UK when deciding the issue of territorial jurisdiction.