How do you decide if expatriate employees’ legal rights fall under UK or foreign law?

The recent legal case of Jeffery v The British Council shows employers how to decide whether expatriate employees’ legal rights fall under British or overseas employment law. Helena Rozman of global law firm Dentons explains.

Employers that recruit staff in the UK, but employ them overseas are warned that their employees might be able to bring an employment tribunal claim in the UK.

The recent case of Jeffery v The British Council confirmed that if expatriate employees can show that they have a sufficiently strong connection to the UK, this might override the general understanding that the place of work determines which laws govern an employment relationship.

The question whether or not expatriate employees can bring claims under UK employment law has been explored over the last 10 years.

The general rule, identified in Lawson v Serco Ltd, is that it is the place of an individual’s employment that determines which laws apply to the employment relationship.

This is unless any of the following exceptions are present, in which case the individual is likely to be able to bring a claim in the UK:

• the employee ordinarily works in the UK and was working in the UK at the time of the dismissal;
• a peripatetic employee’s base was
  in the UK at the time of dismissal despite routinely moving between jurisdictions;
• an expatriate employee is working abroad for a UK employer within an extra-territorial political or social enclave, or has been posted abroad for a business purpose carried on in the UK; or
• the employee has an equally strong connection with the UK as the jurisdiction in which they work.

Ravat v Halliburton Manufacturing and Services Ltd [2012] ICR 389 built on this and established that, if employees working abroad can show a “sufficiently strong” connection with the UK, then they may come within the scope of UK employment law.

Jeffery v The British Council

In the recent case of Jeffery v The British Council, the claimant was a UK-appointed employee of the British Council. He was working in Bangladesh, managing a teaching centre. When the claimant resigned from this role, he tried to bring claims against the British Council under UK legislation, namely the Employment Rights Act 1996 and the Equality Act 2016.

The claims for constructive unfair dismissal, whistleblowing detriments and discrimination were rejected by the employment tribunal on the basis that, as an expatriate employee, UK employment law did not apply to his employment relationship with the British Council.

On appeal, the Employment Appeal Tribunal (EAT) allowed the claimant’s challenge and overturned the tribunal’s decision, stating the claimant had an “overwhelmingly stronger connection with Great Britain and with British employment law than any other system”. In arriving at this conclusion, the EAT considered the following points:

• the claimant was a UK citizen, recruited in the UK to work for a UK organisation;
• he was engaged under a contract of employment, which expressly incorporated English law and made reference to the Official Secrets Act 1989;
• the claimant was entitled to a pension under the Civil Service Pension Scheme;
• his salary was paid in sterling and it was subject to notional deductions for UK income tax; and
• the teaching centre where the claimant worked was considered part of an operation of The British Council, which the EAT deemed a public body with an important role in UK public life.

The EAT did not consider that the first two points alone were enough to demonstrate that his claims should be heard in the UK.

It was only by considering all of the points in conjunction that the EAT established the claimant had an exceptional degree of connection with the UK and UK employment law.

Lessons about expatriate employees and legal jurisdiction

While this particular case is likely to only apply in exceptional circumstances, the decision helpfully outlines some of the considerations a tribunal will have regard to when deciding whether or not a case falls within its remit. It also shows the weight a tribunal will give these considerations as well as highlighting the factors that employees can try to rely upon when attempting to show their connection with UK employment law.

This case demonstrates that employees who are “truly expatriate” may still have the ability to bring their claims under UK law by clarifying that previous cases do not present an exhaustive list of exceptions to the general rules of territorial jurisdiction.

Practical questions to consider

Employers that engage individuals in the UK and then deploy them overseas should give early consideration to several practical questions:

• Which legal system will regulate the employment relationship?
• Will the employer pay the employee in local currency or sterling?
• What percentage of time will the employee spend working in that jurisdiction?
• Will the employee receive any benefits deriving from the UK as part of their employment?
• Can a foreign group company engage the employee rather than the UK entity?

If, when taken together, the answers to the above questions indicate a sufficiently strong connection to the UK, the employee may be able to bring an employment claim in the UK.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

Email(Required)

OptOut

From time to time, we will send you emails about selected products, events and services from Personnel Today and OHW+ - but you can choose to opt-out at any time. If you do not wish to receive these emails, please tick this box.

Name

This field is for validation purposes and should be left unchanged.

Δ

Where an employer already has employees overseas, it should review these arrangements.

If UK law applies to an expatriate employee, then the same rights and protections apply to him or her that apply to UK-based employees.