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 Supreme Court has decided in United States of America v Nolan that the obligation also applies to employers who are classified as public administrative bodies or sovereign states.
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, Ms 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.
Previous court decisions
Although the tribunal and the EAT agreed with Ms Nolan and awarded protective awards, the Court of Appeal referred 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. The CJEU held, however, that as the directive did not apply to sovereign states, the whole issue fell outside the scope of the directive.
The US then went back to the Court of Appeal to ask it to interpret the 1992 Act in line with the decision of the CJEU. The Court decided, however, that as the CJEU’s role was to decide the effect of the directive, not the construction of the domestic statute, its decision had no impact on the conclusions of the tribunal and EAT. Even if the decision could be interpreted as meaning that the US was entitled to claim state immunity under EU law, the Court pointed out that it could have invoked the “special circumstances” defence in section 188(7).
The US appealed to the Supreme Court arguing that, in light of the ruling of the CJEU, the UK courts should interpret TULRCA as not being applicable to sovereign states.
Supreme Court decision
Holding that the US was subject to the obligations under TULRCA, the Supreme Court dismissed the appeal by a majority of 4:1.
The Court held that just because the present (and rare) situation had not been foreseen did not mean a specific exemption should be read into the legislation which did not reflect the wording or scope of any exemption in EU law. This was particularly the case, given that the US could have invoked state immunity but did not do so in time.
In line with both international and domestic law which is primarily territorial in terms of jurisdiction, TULRCA states expressly that it extends only to England, Wales and Scotland. It requires employers to consult with employees who work within that jurisdiction and who are being made redundant. Just because the US took the decision in Washington to close a base in England did not mean that the UK was legislating extra-territorially.
Finally, the Supreme Court also rejected the argument that regulations which amended TULRCA in 1995 to require employee representatives to be designated for consultation purposes exceeded the power granted to the Secretary of State by the EU.
The case will now go back to the Court of Appeal to consider whether the US complied with its redundancy consultation obligations under UK law.