Seahorse Maritime Limited v Nautilus International (UKEAT/0281/16)

The EAT has held that employees who can demonstrate a sufficiently strong connection with the UK will be entitled to collective consultation in a redundancy situation.

Seahorse Maritime Limited ("Seahorse") employed crews of various nationalities to operate a fleet of ships owned by Sealion Shipping Limited ("Sealion"). These ships largely remained stationary outside UK or European territorial waters, with only a limited number making international voyages. In 2015, Sealion decided to take four of its UK-based ships out of service, leaving a group of crew members redundant.

Nautilus International (a trade union) subsequently brought a claim against Seahorse for breach of collective redundancy requirements, notably the obligation to consult with affected employees, when there is a proposal to dismiss 20 or more employees at one establishment within a 90 day period. Nautilus argued that the UK-domiciled employees of Seahorse were entitled to a protective award of 90 days' pay. The ET upheld the claim, deciding that all of the ships on which the redundant employees had been employed had to be considered together as one establishment. As such, collective consultation obligations applied to the UK-domiciled employees employed on those ships, even though they were working outside of the UK when they were made redundant.

On appeal, the EAT agreed that each vessel was not an “establishment”; and rejected Seahorse's argument that the ET did not have jurisdiction to hear the claims. It held that the connection to the UK and UK employment laws of the individual employees, and not the establishment, should determine whether the ET had jurisdiction over the claim. As Nautilus had restricted the scope of its claim to UK-domiciled employees whose contracts were governed by English law, the EAT upheld the first instance decision.

This case makes clear that before carrying out mass redundancies employers should think broadly when defining the "establishment" in which the dismissals will take effect and that should include considering whether overseas employees may be deemed to have sufficient connection to the UK that they should be counted for the purposes of determining whether the collective consultation obligations are triggered.