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Collective Redundancy Consultation - Update

In United States of America v Nolan, the Supreme Court has ruled that the US Government did have collective redundancy consultation obligations with regard to civilian workers during the closure of a US army base at Hythe in Hampshire.

Difficulties over when consultation should commence have arisen in the past because EU Directive 98/59/EC, the Collective Redundancies Directive, provides that an employer should begin consultations when ‘contemplating’ making collective redundancies, whereas this duty is given effect in domestic law – under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) – as being a duty to consult when an employer ‘proposes to dismiss’ employees as redundant.

In this case, some 200 civilian employees were dismissed by way of redundancy following a decision by the Secretary of the US Army to close the base in Hampshire. One of the employees, Christine Nolan, brought a claim on behalf of the redundant employees for compensation by way of a ‘protective award’ under TULRCA on the ground that the USA had failed to consult with representatives of the civilian workforce in accordance with its obligations under Section 188. She argued that the consultation period was far less than the 90-day period required and, in particular, that there had been a failure to consult before, and about, taking the operational decision to close the base. The USA did not rely on state immunity in order to defeat the claim, although it was common ground that it could have done so.

The Employment Tribunal found that no meaningful consultation over the closure of the base, and the redundancies this would involve, had taken place and awarded Mrs Nolan a 30-day protective award. The Employment Appeal Tribunal upheld this decision, relying on the decision in UK Coal Mining Ltd. v National Union of Mineworkers that where closure and dismissals are inextricably linked, the duty to consult over the reasons for the closure arises.

The USA appealed to the Court of Appeal on the ground that the more recent judgment of the Court of Justice of the European Union (CJEU) in a Swedish case (Akavan Erityisalojen Keskusliitto AEK ry and Others v Fujitsu Siemens Computers) is authority for the proposition that, on the true interpretation of the Directive, the consultation obligation is not triggered by a proposed business decision to close down a workplace but only arises at the later stage when the decision has been made and the intention to make the employees redundant has been formed.

The Court of Appeal sought guidance from the CJEU as to the precise point at which the obligation to consult arises under the Directive. However, the hoped-for clarification was not forthcoming. Although TULRCA does not exclude workers employed by public administrative bodies or by establishments governed by public law, the Directive expressly provides for them to be excluded from its scope. The CJEU held that the dismissal of staff at a military base did not fall within the scope of the Directive and declined to hear the case as it did not have jurisdiction to do so.

The case returned to the Court of Appeal, where the USA argued that since EU law did not require or intend a foreign state to be subject to the Directive’s consultation obligations, TULRCA should be construed in the same way. The Court rejected this argument and made an order that there be a further hearing to decide on the UK Coal/Fujitsu issue.

The USA appealed to the Supreme Court, arguing that TULRCA should be interpreted in such a way as to accord due respect to its authority as a foreign state to make strategic decisions which are non-commercial in nature. The decision to close the centre had been taken at a very high level in Washington and the interpretation thus far favoured did not accord with principles of international law.

However, the Supreme Court found that the wording of the legislation was clear and there was no reason to read into it a tailored exemption for a foreign power operating a base within the UK. The Court found that this is the case even though TULRCA goes beyond the requirements of the Directive it implements.

Arguments that the UK had breached international law by seeking to exercise legislative power outside its own territory were also rejected.

The case will now return to the Court of Appeal for it to consider whether or not the US Government complied with its redundancy consultation obligations under domestic law.

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