Section 188 of the 1992 Trade Union and Labour Relations Consolidation Act (TULRCA) states that employers must consult when "proposing" to dismiss an employee. The Court of Appeal has decided in United States of America v Nolan that the obligation extends to employers who are classified as public administrative bodies or sovereign states.

Basic facts

The US army decided in March 2006 to close a military base at Hythe in Hampshire. The workforce was informed of the decision about a month later and the Ministry of Defence was formally notified in May. Consultation with the union started in early June and about 200 civilian employees were made redundant at the end of September.

One of them, Mrs Nolan, who was an employee representative, brought a claim for a protective award. She argued that the USA had failed to consult with representatives of the civilian workforce in accordance with its obligations under section 188 of TULRCA. In particular, that it had not consulted in advance about the operational decision to close the base.

Decisions of courts

Although the tribunal and the EAT agreed with her, the Court of Appeal held that it needed to refer the matter to the Court of Justice of the European Union (CJEU) to clarify when the employer's obligation to consult about collective redundancies arose. It therefore asked the Court to decide if the obligation arose when the employer was proposing to make a strategic business or operational decision that would lead to collective redundancies; or when the decision had actually been made.

The CJEU did not, however, answer that question. Instead it held that, as the directive did not apply to public administrative bodies (PABs), the whole question of the dismissal of a UK national by a non-member state fell outside the scope of the Collective Redundancies Directive altogether.

Following that decision, the US asked the Court of Appeal to hold that the 1992 Act had to be interpreted in line with the decision of the CJEU.

Court of Appeal decision

However, the Court of Appeal held that when drafting the precursor to the 1992 legislation (the Employment Protection Act of 1975), the drafters had made a “deliberate choice” not to reproduce the same terms as the directive, but instead to restrict the exclusion to “crown employment”.

That was not surprising as there was no equivalent in common law of a special employment regime for public employees in civil law countries. It therefore made perfectly good sense for Parliament to have settled for a touchstone which used common law concepts and would be (comparatively) easy to apply in the UK.

As for the argument that the 1992 Act should be interpreted in such a way as to exclude an employer which is a sovereign state from having to consult about redundancies, the Court of Appeal said that the US should just have made a straightforward claim of state immunity, as opposed to trying to imply an exclusion into the statute.

The CJEU’s decision did not affect the earlier reasoning of the tribunal and the EAT as its role was to decide the effect of the directive as a matter of EU law, not to decide on the construction of the domestic statute. Even if it could be interpreted as meaning that the USA was entitled to claim state immunity under EU law, it pointed out that it should have just invoked the “special circumstances” defence in section 188(7).

Comment

The US have applied to the Supreme Court for leave to appeal against the Court of Appeal’s decision.