Lawson v Serco

Lawson v Serco
House of Lords

Territorial scope of the right not to be unfairly dismissed

The House of Lords has given its judgment in Lawson v Serco, dealing with the territorial scope of the right not to be unfairly dismissed. It is a decision which affects expatriates, peripatetic employees and other overseas workers who have been unclear about their rights since the government repealed legislation in this area in 1999 without introducing anything new in its place.

The three cases of Serco v Lawson, Botham v Ministry of Defence and Crofts and others v Veta Limited and others were heard together. Lawson was domiciled in England and employed by a company based in the UK. He worked as a security operator on Ascension Island in the South Atlantic. Botham worked at various MoD establishments in Germany. He was treated as resident in the UK rather than Germany for various purposes, including tax. Crofts was a pilot working for a wholly-owned subsidiary of Cathay Pacific Airways – both companies registered in Hong Kong. Importantly, his permanent home base was in the UK (Heathrow). In each case, the issue was essentially the same – whether unfair dismissal rights applied notwithstanding the foreign elements.

The Court of Appeal ruled that the test was one of ’employment in Great Britain’ and that the unfair dismissal provisions did not apply where service was performed abroad. On that basis, Lawson and Botham were not protected but Crofts, who was based in the UK, qualified.

The House of Lords, however, held that the key phrase ’employment in Great Britain’ should be treated as a general principle rather than a firm rule. The issue should be determined by reference to how the contract was being operated at the time of dismissal (rather than what might have been contemplated when the contract was made).

Three types of cases were identified.

• Standard cases – if the employees were working in Great Britain (GB) at the time of their dismissal they will be able to pursue claims of unfair dismissal in GB.
  
• Peripatetic employees (eg pilots) – able to bring a claim of unfair dismissal in GB provided they are ‘based’ here. Crofts therefore qualified.
  
• Expatriate employees (ie employees who “work and are based abroad”). These employees will not be able to pursue unfair dismissal claims, apart from in exceptional cases. These would include, for example, foreign correspondents working abroad on behalf of British newspapers or employees who are working abroad in embassies or RAF bases. Botham and, to a lesser degree, Lawson qualified as exceptional cases.

Key points

• The House of Lords has departed from the Court of Appeal’s relatively strict line of looking at whether the employment was in Great Britain. This must be treated as a general principle rather than a firm rule.
  
• The House of Lords gave two examples of situations where expats may qualify for unfair dismissal rights – the employee posted abroad to work for a business conducted in GB and the employee working in a political or social British enclave abroad. An employee not fitting into either category would need to establish equally strong connections with GB to stand a chance of qualifying.

What you should do

• Don’t place too much reliance on the employee’s contract of employment when trying to determine this issue. It should be determined by reference to how the contract was being operated at the time of the dismissal.
  
• Be aware that expats may be able to claim under both UK law and local law. For example, a foreign correspondent living in Rome would be entitled to rights in Italian law under the Posted Workers Directive.