Nikki Duncan
Posted on 3 Mar 2015

Sun, sea and unfair dismissal rights: employees working abroad

In the age of mobile communications and omnipresent internet access, it is rare for employees to be chained to their office desk. Nowadays, it is commonplace for people to be on the phone, or checking their emails, from any location. This, combined with business globalisation, has made a world where employees can spend their week working in an entirely different country to that of their employer. But, where an employee is ostensibly working in an entirely different jurisdiction, what happens when the employment relationship goes sour? Is their employer at risk of receiving an unfair dismissal claim, or can it successfully argue that the employee does not have UK employment rights?

The journey so far…

The history to this issue is long and messy, and has often left employers, employees and even Judges in a quandary. Until 1999, the Employment Rights Act 1996 (ERA) provided that employees 'ordinarily working' outside Great Britain did not have the right to bring employment claims in the Employment Tribunal. The definition was, at best, woolly, and caused endless amounts of dispute. Cue Parliament's removal of the 'ordinarily working' test from the ERA. The legislation was now silent as to its territorial scope, and the position was no less confusing. Unsurprisingly, several cases on this issue followed.

The first landmark case to be heard by the House of Lords was that of Serco v Lawson [2006]. Lord Hoffman confirmed the general principle that the right not to be unfairly dismissed applied only to employees who were working in Great Britain at the time of dismissal. However, he considered there to be two exceptions: one, peripatetic workers based in Britain but working abroad and, two, expatriate employees e.g. those working for a British employer operating a political or social British enclave, or employees posted abroad for the purposes of business carried on in Great Britain. 

Lord Hoffman's judgment was welcome, mainly because it attempted to plug a gaping hole in the law. However, whilst moderately helpful, it was also very specific. Trying to pigeonhole employees working abroad into Lord Hoffman's narrow categories was a difficult task, and tended to exclude a large proportion of those employees. 

It took 6 years for the Supreme Court to rule, in Ravat v Halliburton [2012] that Lord Hoffman's analysis had proved difficult to apply. It held that the issue could be dealt with in a single question – 'is the connection with Great Britain sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for a Tribunal to deal with the claim'.

Clarity in Creditsights?

The Court of Appeal has recently re-visited the issue, in the case of Creditsights Ltd v Dhunna [2014]

The Claimant was a British national who worked for a British subsidiary of a US company. After initially working in London, he moved to Dubai where he lived and worked at the time of his dismissal. He received some administrative support from the UK office, but his line manager was based in New Delhi.

The Court of Appeal restored the initial decision of the Employment Tribunal, which had been overturned on appeal, and held that the Claimant did not have standing to bring a claim in the UK. The Court held that the Claimant had regarded his move to Dubai as permanent or semi-permanent, noting that the Claimant had obtained a three year visa, which he intended to renew, and had sent an email to a colleague stating that he was glad to be leaving the UK and hoped never to return. The general rule was that it was very unlikely that someone working abroad would have the right to claim unfair dismissal. To overturn this presumption, the Claimant would have to show that he was working in Dubai for the purposes of the UK subsidiary, in other words, as a representative of the business conducted in the UK. As he could not show this, he was not deemed to have a 'sufficiently strong connection with the UK' to entitle him to bring an unfair dismissal claim in the UK Employment Tribunals. 

The future…

Ravat and Creditsights have helped distil the guidance in Serco to the 'sufficiently strong connection' test, which has undoubtedly provided clarity and easier application. Nevertheless, territorial jurisdiction is still a thorny issue, plagued with difficulties. With complex business structures and unusual working arrangements now the norm, each case will, to use the old lawyers' adage, turn on its own facts. 

The future? Undoubtedly more litigation. Watch this space…

For more information please contact Nikki Duncan, Partner in the employment team on nikki.duncan@michelmores.com or 01392 687684 or Rachael Lloyd, Solicitor in the employment team on rachael.lloyd@michelmores.com or  01392 687526.