Supreme Court rules that collective redundancy consultation

In United States of America v Nolan, the Supreme Court has upheld the decisions of the Employment Appeal Tribunal and the Court of Appeal in finding that the obligation to collectively consult with employee representatives on redundancy proposals in connection with the closure of a USA military base in the UK did apply to the USA Government.

An employer must consult with employee representatives on any proposals to make large-scale redundancies of 20 or more employees within a period of 90 days.  The aim of the consultation is to discuss ways of avoiding dismissals, reducing the number of dismissals and/or mitigating the consequences of any dismissals. The obligation to consult is set out at section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) which implements the UK’s obligations under the EU Collective Redundancies Directive (the “Directive”).

The case of United States of America v Nolan arose following the closure of a USA military base in the UK. 

In March 2006, the USA Government decided to close the military base in Hampshire by the end of September 2006 and communicated this to employees in April 2006.  Collective consultation on proposed redundancies took place with employee representatives in June 2006.  Employees were given notices of dismissal at the end of June 2006, taking effect in September 2006.

The Claimant, one of the employee representatives, brought a claim under TULRCA on behalf of the employees affected, arguing that there should have been collective consultation prior to the decision to close the military base, as it was no longer possible to have meaningful consultation about avoiding the redundancies when the strategic decision to close the base had already been made.

The Employment Tribunal upheld the Claimant’s claim.  The USA Government appealed firstly to the Employment Appeal Tribunal (“EAT”), then to the Court of Appeal and ultimately to the Supreme Court.

It appealed on two grounds:

1.       First, that foreign governments should be exempt from the duty to consult collectively on the basis that this was a strategic military decision of a sovereign or governmental nature; and 

  1.        Second, that the duty to consult collectively was not triggered until after the decision to close the military base. 

In relation to the first ground of appeal, the USA Government relied on the fact that on a referral by the Court of Appeal to the European Court of Justice (“ECJ”), the ECJ had held that this case fell outside of the scope of the Directive because the Directive contains an exemption in relation to workers employed by public administrative bodies.  It argued that although TULRCA does not contain the same exemption, TULRCA should be interpreted in accordance with the Directive.

The Supreme Court rejected this argument on the basis that it was a conscious drafting decision not to include the same exemption in TULRCA and there was no scope for adopting an alternative interpretation of the UK legislation where such legislation had been clearly drafted. So, the law applied to the USA government in relation to its employees in the UK.

The USA had fought the case on whether TULRCA was applicable to it and, by doing so, had lost the opportunity to rely on the separate defence of State Immunity.

Having decided that the USA Government was not exempt from its obligations under TULRCA, the Supreme Court remitted the second question, regarding when the duty to collectively consult was in fact triggered, to the Court of Appeal.

This decision means that the collective consultation obligations under TULRCA will apply to employees of public administrative bodies, such as USA government employees working on UK soil, even though this goes beyond the Directive.  This aspect of the decision may be of limited application for most employers and it is likely that foreign states would in most cases seek to rely on State Immunity.  However, the case will now return to the Court of Appeal to resolve the outstanding question of whether the duty to collectively consult arose before or after the USA Government made the strategic decision to close the UK military base. 

This is an important issue for all employers making 20 or more employees redundant at one establishment within a period of 90 days. The Court of Appeal’s decision on this issue may provide useful guidance to help employers to assess when exactly the collective consultation duty to consult collectively is triggered.

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