The US v Nolan: Supreme Court decision on collective redundancies

he distinction under consideration is a subtle one - should collective consultation have started when the US government was merely proposing to close its UK army base such that collective redundancies might foreseeably or inevitably follow, or did the US government only have to start consulting after the decision to close had been taken and consequential redundancies were then proposed? Yesterday's Supreme Court decision does not deal with this issue in this judgment - rather the Court of Appeal will give judgment on this issue, probably in 2017. Until we receive the Court of Appeal decision, uncertainty remains over when precisely collective consultation must start. In the meantime, the Supreme Court has issued its decision over certain preliminary jurisdictional issues in the case.

BACKGROUND

The case involved the closure of a US army base in Hampshire, where Mrs Nolan worked as a budget assistant. The US Government decided to close the base in 2006 and Mrs Nolan (along with the other employees at the base) was dismissed for redundancy in September 2006. Mrs Nolan issued Employment Tribunal proceedings on 9 November 2006, claiming that her employer had failed to consult with any employee representative in relation to the redundancies as required by the procedure for handling collective redundancies prescribed by the Trade Union and Labour Relations (Consolidation) Act 1992. The US, as Mrs Nolan's employer, denied that it had any duty to consult. Mrs Nolan was successful in both the Employment Tribunal and the Court of Appeal. The US appealed to the Supreme Court on the grounds that the relevant UK legislation was not applicable to its base in the UK. The Supreme Court has now dismissed the appeal by the US and held that as an employer they had been under a duty to consult with its employees at the base.

The US argued in the case that UK and EU law governing this area should not apply to it on the basis that it is a key principal of international law that one state does not legislate to affect policy decisions made by another. In this case, the decision to close the base was a policy decision which it said had been made by at the "highest level" by the US Government in Washington.

SUPREME COURT REASONING

The Supreme Court rejected this argument, and held that the UK legislation governing this area was consistent with international law. The legislation is expressly stated to extend to England, Wales and Scotland and regulates the procedure for dismissal on the grounds of redundancy of employees who are within that jurisdiction. Although the decision to dismiss the employees in question was made in Washington, the dismissals related to the base in England, and therefore the UK was not legislating extra-territorially in this area in applying this legislation to the US as an employer in the UK. The Supreme Court held that a plea of state immunity might have been useful to the US, but that it had not been invoked at an early enough stage in proceedings.