UK: Unfair dismissal - Supreme Court rules on rights for international commuters based in Britain

Employees who live in Britain and commute to work abroad may have unfair dismissal rights in Britain, particularly if the employment contract is governed by British employment law and the employee has been reassured that he will retain British employment law rights. The Supreme Court has ruled that unfair dismissal rights will be available where the employment relationship has a stronger connection with Great Britain than with the foreign place of work.

Employers should bear this ruling in mind when determining what governing law to apply to an individual's employment contract, what response to give to requests for reassurance on employment law rights, and in which countries to recruit. They should also consider whether unfair dismissal rights may apply before deciding the process and reasons for dismissal of internationally mobile employees.

In Lawson v Serco the House of Lords (now the Supreme Court) established that an employee can claim unfair dismissal in Britain if they are (i) employed here at the time of dismissal, (ii) a peripatetic employee based here, or (iii) an expatriate employee posted abroad by a British based employer to work for the British business, in a British enclave abroad or with some other equally strong connection with Britain and British employment law.

Recent cases led to confusion as to whether these three categories are exhaustive and, if so, how much flexibility there is in the scope of each category.

In Ravat v Halliburton Manufacturing and Services an employee of a British company worked a rota of four weeks mainly off duty in the UK followed by four weeks in Libya for a German group company, and was paid and taxed in the UK within the normal remuneration structure applicable to GB-based employees.  He was a British citizen and lived and had been recruited in Britain. His dismissal was handled by HR in Aberdeen.

The Scottish Court of Session ruled that he was entitled to bring an unfair dismissal claim, but failed to agree on whether this was because the employee fell within a fourth category (if this was permitted by Lawson) or because he came within the peripatetic category.

The Supreme Court has now confirmed that  Lawson categories (ii) and (iii) are only examples of situations where there is a sufficiently strong connection between the employment and Britain/British employment law.  There can be other situations where there will be such a sufficient connection.

An individual in the expatriate category both working and living outside Britain (Lawson category (iii)) will need an especially strong connection with Britain and British employment law. In contrast, where the employee has his home in Britain, with all the consequences that flow from this for the terms and conditions of employment, the burden of showing sufficient connection is less onerous.

The key is whether the employment relationship has a stronger connection with Britain than with the foreign country where the employee works. Factors which are relevant, but not determinative include:

• the place of employment
• whether the relationship was "rooted and forged" in GB (in other words, whether the employee is a British national and was recruited in Britain by a British company)
• the governing law of the employment contract
• where the employee lives
• whether reassurance was given as to whether British employment law applied.

The Court did not attach as much significance to the fact that the employee was working for a German associated company as it would have done had the company not been a Halliburton group company.  It recognised that "the vehicles which a multinational corporation uses to conduct its business across international boundaries depend on a variety of factors which may deflect attention from the reality of the situation in which the employee finds himself". 

The question was ultimately one of fact and degree and the Supreme Court therefore upheld the tribunal's ruling that there was sufficient connection with Britain in this case.

While this case brings some clarity to the territorial ambit of unfair dismissal law, there remains uncertainty as to when employees working outside of Britain can bring discrimination claims under the Equality Act 2010, given that the Act contains no express territorial jurisdiction limitation.

A recent Employment Tribunal took the view that the Lawson test should apply in relation to a pregnancy discrimination claim by a UK-qualified solicitor and equity partner of a UK law firm who was expelled from the partnership while working in Tanzania.  The Tribunal ruled that the claimant had sufficiently strong connections with Britain to justify the Tribunal having jurisdiction. These connections included that the claimant worked at least partly in Britain; the LLP agreement was governed by English law; she was a member of a LLP which resulted in her agreeing budgets with her partners in London; she visited London on a regular basis; she was mainly paid from London; all her time recording was done on the LLP's time recording system; all invoices generated were from Britain; she was provided with administrative support from London; she appeared on the Law Society website list of solicitors as a member of the LLP; and the LLP's press releases detailed her as being a member. (Bates Van Winkelhof v Clyde & Co, ET)

It may be that a wider group of employees than those within Lawson can also avail themselves of Equality Act rights.  Employees working partly in Britain were protected under the predecessor legislation and it is unlikely that tribunals will give the Equality Act a narrower scope.  Further, caselaw (Duncombe and Bleuse) has established that UK laws which are derived from EU law must be construed as permitting claims in England where English law is the proper law of the contract, at least where the employee works in the EU.  This area remains ripe for Supreme Court attention.

Of course the territorial ambit of legislation is only part of the picture.  The tribunals also have to have procedural jurisdiction, which requires the employer to reside or carry on its business in Britain, although this was given a broad interpretation in Pervez v Macquarie Bank.