In the latest case to consider offshore or maritime workers, the Employment Appeal Tribunal has for the first time considered the territorial scope of UK collective redundancy consultation rights.

If 20 or more crew members working on a single oil rig or a ship are dismissed as redundant, it is possible that the UK's collective redundancy rules will be triggered provided the crew members themselves have a sufficiently close connection to the UK for the UK tribunals to have jurisdiction. The UK collective redundancy rules require an employer to inform and consult employee representatives when proposing to dismiss 20 or more employees as redundant at an "establishment" within a 90 day period. Breach of these rules can lead to a protective award of up to 13 weeks' pay per employee. This can be very expensive for employers. The affected employees or their unions or representatives can bring a claim in an Employment Tribunal.

But what if a number of ships are to be taken out of action, and there are fewer than 20 crew members to be dismissed on each ship? Their employer won't need to inform and consult under the collective redundancy rules if each ship is an "establishment" in its own right. However, if all the ships taken together are deemed to be one establishment, and 20 or more employees are to be dismissed, the collective redundancy rules will apply.

For the first time in the UK tribunals, the case of Seahorse Maritime Limited v Nautilus International (a trade union) (2017)[1] considered whether crew members in this situation had the right to bring claims in a UK employment tribunal.

What happened in this case?

Seahorse, a Guernsey registered company, employed crew which it supplied to specialist ships owned and operated by other companies. A UK company dealt with employee administration. The crew were stationed all over the world (mainly at a fixed location, such as static oil rigs) for 4-6 weeks at a time. The crew who were UK domiciled would return home at the end of each trip, but then tended to return to the same vessels in the same locations. Nautilus was the trade union that had collective bargaining rights in respect of the employees.

Four ships were taken out of service, meaning that the crew working on those ships would no longer be needed. More than 20 crew members were made redundant without following collective consultation rules, so Nautilus, the union, brought claims in the employment tribunal for protective awards for failure to inform and consult with the UK domiciled employees.

Could the employees claim protection from UK law?

Although the employees' place of work was not in Great Britain, the tribunal found that the UK domiciled employees had a strong enough connection with Great Britain so, therefore, did have the right to be informed and consulted about the redundancies.

On appeal, the Employment Appeal Tribunal (EAT) agreed in principle with the tribunal on this point although the judge was less convinced about the tribunal’s conclusion that the employees were "peripatetic" i.e. moved location from time to time, as the employees were mostly working on static platforms, which they returned to each time they worked at sea. Instead, the EAT thought that the employees were more like "international commuters". Factors that the EAT found relevant included:

  • the employees were domiciled in the UK

  • their employment contracts were stated to be governed by English law

  • Seahorse used a UK registered company to manage the employees.

The establishment point

The redundancies were over four different ships, and less than 20 crew members would be lost on each ship. This raised the next question: whether each ship was a separate "establishment", so that the obligation to inform and consult could be avoided. The tribunal concluded that all of the ships in the fleet had to be considered together, forming one establishment, as although generically, individual ships are capable of being establishments, in this case, each ship could not be said to be a distinct part of Seahorse’s undertaking. The tribunal also took into consideration the fact that:

  • some employees were not attached to a particular vessel and transferred between them; and

  • the UK administrator treated the employees as a group rather than in relation to each ship.

On appeal, the EAT agreed that the tribunal had taken the correct approach in deciding the appropriate establishment.

What this means in practice

This case clarifies that, depending on the facts, individual employees working outside the UK who have a sufficiently strong connection with the UK, may have the right to be consulted if their employer proposes to dismiss as redundant 20 or more employees at any one establishment, anywhere in the world, within a 90 day period.

Where, despite working outside Great Britain, an employee is domiciled in the UK, and works for the benefit of a UK company governed by English law, it appears likely that the employee will be able to show that sufficient connection, and benefit from UK employment laws. But the issue can be highly fact dependent and difficult to predict: the law is constantly developing, and it is understood that Seahorse has again appealed, and the case will be heard before the Court of Appeal in June 2018.

Employers should consider this risk factor when planning their operations initially or making workforce changes, and take appropriate advice.