Seahorse Maritime Ltd v Nautilus International

For collective redundancy consultation, an establishment is the functional and organisational unit to which employees are assigned. It need not have separate legal, financial or managerial autonomy, and the identity of the employer or operator is not decisive.

Where workers are supplied to another undertaking, the relevant questions are whether the unit is an establishment and which employees are factually assigned to it. The territorial reach of the collective right is assessed by reference to the establishment, not individual employees. An establishment outside Great Britain will ordinarily fall outside the statutory scheme unless special connections with Great Britain overcome that territorial pull.

Seahorse Maritime employed crew supplied to vessels in the TOISA fleet, operated by another company and generally stationed outside Great Britain. Nautilus, the recognised trade union, brought proceedings under Chapter II of Part IV of the Trade Union and Labour Relations (Consolidation) Act 1992, alleging breach of the duty to consult about proposed redundancies.

The Employment Tribunal held that it had jurisdiction and that the ships were not separate establishments. The Employment Appeal Tribunal upheld those conclusions. The Court of Appeal considered whether each ship was an establishment, which employees were assigned to it, and whether the collective consultation rights had a sufficient connection with Great Britain.

1. Establishment. The appeal was allowed. An establishment is the unit to which employees are assigned to carry out their duties, assessed by its functional and organisational characteristics. It may be a distinct, stable operating unit with its own tasks, workforce, technical means and organisational structure. Separate legal, financial, administrative or technological autonomy, or independent power to make redundancies, is unnecessary. The approach in Rockfon A/S v Specialarbejderforbundet i Danmark C-449/93 and Athinaïki Chartopoïïa AE v Panagiotidis C-270/05 was applied.
2. The identity of the employer or operator is not itself material. A workforce employed by one company may be assigned to a unit operated by another. Contractual mobility clauses, centralised human-resources functions and central administration of redundancies do not determine the issue. The factual position remains important. The Employment Tribunal had misdirected itself on those matters and had applied too broadly the employee-focused reasoning in Renfrewshire Council v Educational Institute of Scotland [2012] UKEAT 0018/12.
3. Each TOISA ship was a self-contained operating unit and therefore an establishment. The findings showed that, typically, Seahorse crew returned to the same ship for successive rotations. The position of non-assigned workers, such as the riding squad, was not determined.
4. Territorial scope. The primary duty under section 188 is collective. The sufficient-connection inquiry must therefore focus on the establishment defining the relevant workforce, rather than undertaking individual Lawson v Serco Ltd [2006] UKHL 3 or Ravat v Halliburton Manufacturing & Services Ltd [2012] UKSC 1 assessments for each employee. The ships were stationed outside Great Britain, and the use of an agent in Farnham to perform some functions did not overcome the territorial pull of the place of work.
5. Nautilus’s claim was dismissed insofar as it concerned proposed redundancies of Seahorse crew assigned to ships in the TOISA fleet stationed outside Great Britain.

• Court of Appeal (Civil Division): Appeal allowed and Nautilus’s claim dismissed in relation to crew assigned to TOISA ships stationed outside Great Britain.
• Employment Appeal Tribunal: On 30 June 2017, Slade J upheld the Employment Tribunal’s conclusions on establishment and territorial scope.
• Employment Tribunal: On 19 August 2016, Employment Judge Allen held that the tribunal had jurisdiction and that each ship was not a separate establishment.