Last month’s Court of Appeal decision on overseas employees bringing claims in the UK is good news for employers. Blair adams reports on what this means for UK organisations
Can an employee posted to Easter Island sue you for unfair dismissal in Croydon? No, said the Court of Appeal on 23 January in giving its ruling in the case of Lawson v Serco Limited, a decision that spells good news for UK employers regarding the ability of overseas employees to bring other statutory claims in the UK.
The Court of Appeal rejected Lawson’s argument that he should be allowed to bring his unfair dismissal claim in a UK Employment Tribunal. The court held that the right to bring a claim of unfair dismissal applies only to employment in Britain.
The facts: Serco, an English company, employed Lawson to work as a security guard at an RAF base on Ascension Island. Lawson never worked for Serco in the UK, but was recruited here and paid from here. He resigned claiming constructive dismissal and tried to pursue an unfair dismissal claim in a UK tribunal. The EAT allowed his claim to proceed, but Serco appealed to the Court of Appeal.
The court stated that it would not normally be difficult to decide whether the employment is in Britain or not. In this case, it was clear that Lawson’s employment was not in Britain. In borderline cases, the test will depend on an assessment of all the circumstances of the case.
The court acknowledged that employees whose employment is in Britain may spend short periods outside the country during their employment. Dismissal during a short absence from Britain would not normally prevent an employee claiming unfair dismissal.
The court rejected the proposition endorsed by the EAT in certain cases in 2003 that an employee whose employment was outside Britain could nevertheless bring an unfair dismissal claim in the UK if he could show a substantial or sufficient connection with Britain.
The court also confirmed that neither the Employment Tribunal rules of procedure nor the governing law of the contract have any bearing on the question of whether an employee can claim unfair dismissal.
This decision is very good news for UK employers that employ people overseas. In Serco, the court firmly grasped an issue that had become increasingly complex in various decisions of the EAT in 2003 (including Bryant v Foreign & Commonwealth Office, Jackson v Ghost Limited and Bishop v Financial Times). The court’s decision will reassure many UK employers that had been faced with the possibility of all their overseas employees being able to bring claims of unfair dismissal in the UK if they could show a substantial or sufficient connection with the UK.
Nevertheless, further debate is likely to centre on what is ‘employment in Great Britain’. Although the Court of Appeal said that it should not be difficult to identify whether the employment is in Britain, it was this very issue in the case of Carver v Saudi Arabian Airlines (EAT 98/0313/3), which, the court acknowledged, was partly at the root of the subsequent statutory changes and legal debate about whether overseas employees qualified for the right to bring an unfair dismissal claim.
Carver was decided before the repeal of section 196 Employment Rights Act 1996 (ERA). The key issue in the case was whether Ms Carver ‘under her contract of employment ordinarily worked outside Great Britain’. That is almost the converse of asking whether her employment is in Britain – the new test laid down by the Court of Appeal.
The court decided that, taking the entire period of the contract into account, Carver did ‘ordinarily work outside Great Britain’, even though she had spent the past four years of her employment working from London, and that therefore she could not bring an unfair dismissal claim in the UK.
It was the perceived injustice of this decision that, in part, led to the repeal of section 196ERA. That repeal left a legislative vacuum that in turn precipitated the series of cases including Mulcahy v United Airlines, Lawson v Serco and the other cases referred to above.
The Court in Serco has not given any positive guidance on the test to determine whether the employment is in Britain, save to say that the ‘base’ test (ie, the test of where the employee’s base is) is not the correct one.
However, whereas in Carver, the court was bound by the wording of the statute to look at whether the employment “under the contract of employment” (emphasis added) was in Britain or not, it is to be hoped that the simple test now put forward by the Court of Appeal in Serco will involve a common-sense assessment of whether a person’s employment is in Britain or not by reference to all the circumstances, not merely the intention of the parties as recorded in the contract.
There are bound to be borderline cases such as air crew, oil industry workers who spend a few weeks at an overseas installation followed by a few weeks rest in the UK, or employees who divide their time between two countries (eg sales directors responsible for the UK and France). In such cases, it is open to the parties to state in the contract where they consider the employment to be. But it is probably more likely that the issue will remain unresolved until there are legal proceedings, at which point the court or tribunal will resolve it by reference to the factual background – ie where the employee is paid, where he receives his benefits, what his reporting line is and similar factors.
However, employers should note that the principles that apply to contractual claims and to certain discrimination claims (race, religion and belief and sexual orientation) are different and that an employee working outside Britain in similar circumstances to Lawson could potentially bring such a claim in the UK.
The question of whether overseas employees can bring discrimination claims in the UK has become more complex in the past 12 months. Uncertainty arises partly from new and untested legislation and partly because the legislation is not identical across all types of discrimination.
In the employment context, a claim may be brought only if the discrimination occurs in relation to ‘employment at an establishment in Great Britain’. A new definition of what this means came into force in July 2003.
The new definition opens the door for overseas workers to bring claims if:
they do their work partly in Britain; or
they work wholly outside Britain but the employer has a place of business in Britain and the employee’s work is for the purposes of that place of business and the employee is ordinarily resident in Britain when he applies for or is offered the job, or at any time during the course of the employment. There are a number of unknown concepts here:
“work for the purposes of that place of business” – we will have to see how this is interpreted
“ordinarily resident” – generally (and in particular in the context of tax law), a person becomes ordinarily resident in the UK if he adopts the UK as his place of abode for settled purposes as part of the regular order of his life, whether for long or short duration.
If the same concept applied here, the following may be the result:
A bank with a branch in London recruits a US national who, at the time, was ordinarily resident in the UK. It sends him to work in New York where he suffers discrimination on the grounds of race. He may now be able to bring a claim of race discrimination against the bank in a UK Employment Tribunal (provided he can show that his work in New York was ‘for the purposes of” the London branch). That would be the opposite to the previous position under which such an employee could not bring a race claim here because he did his work wholly outside Britain.
Discrimination due to religion or belief or sexual orientation
The rules that apply here are the same as those that apply to race discrimination.
Sex (and Equal Pay)
The principle that discrimination in the employment context must occur in relation to ‘employment at an establishment in Great Britain’ applies here too. However, the definition of this in the Sex Discrimination Act 1975 has not yet been amended in line with the provisions applicable to the other areas of discrimination.
Therefore, if an employee ‘does his work wholly outside Great Britain’ at the time when the discrimination occurs, he cannot bring a sex discrimination claim.
The same rules will apply as for race discrimination when new regulations come into force on 1 October 2004. Until then, the statutory position is, in general terms, the same as for sex discrimination.