More guidance is needed on rights of overseas staff

Only those employees who are “employed in Great Britain” can bring unfair dismissal claims. This was the Court of Appeal’s conclusion in Lawson v Serco last year, debating the practical effect of the geographical jurisdiction provisions of the Employment Rights Act 1996.

However, the Court of Appeal recently revisited this issue in Crofts & Ors v Cathay Pacific Airways Ltd & Ors. Crofts was one of a number of pilots who brought unfair dismissal claims in the English Employment Tribunal. They all lived in Britain, but were employed by companies in Hong Kong. By the very nature of their jobs, they travelled all over the world, and spent most of their working time outside of Britain.

Six of the pilots had ‘home bases’ in London. By contract, this was the place where their tours of duty would normally start and finish, but this was otherwise substantially irrelevant to their ongoing employment. The other pilots had ‘bases’ in either Hong Kong or New York. As they were all employed by companies based in Hong Kong, their wages were paid into Hong Kong bank accounts, and all of their training, disciplinary and grievance procedures were expressed to take place there too.

The key issue to be determined by the Court of Appeal was whether the tribunal had jurisdiction to deal with the unfair dismissal claims. Taking into account the relevant provisions of the Employment Rights Act (ERA) 1996 and the earlier guidance given in Serco, it concluded by a majority of two to one that the tribunal only had jurisdiction to hear the claims of the six pilots who had home bases in London. It went on to say that the place where the contract based the pilots threw some light on whether they were “employed in Great Britain”, although it did not determine this in itself.

While this case concerned international airline pilots, it is still of relevance to other employers who have staff working overseas. Most of all, it serves as a reminder that determining the rights of such employees is not straightforward, as proven by the judges themselves, who did not arrive at the same conclusion.

Lord Phillips took the view that in light of Serco, none of the pilots should have been able to bring unfair dismissal claims in Great Britain. He believed that Hong Kong law should naturally be expected to apply to the employment of pilots of a Hong Kong airline, who were employed on Hong Kong contracts, and paid and managed in Hong Kong – a sentiment that is difficult to disagree with.

It is worth remembering that the position with regard to discrimination claims is different. With the exception of the Sex Discrimination Act 1975 and the Equal Pay Act 1970 (both of which will be amended in October 2005 to bring them into line with other discrimination laws), the discrim-ination legislation goes further than the ERA , and extends protection to employees working wholly outside of Great Britain if:

  • the employer has a place of business at an establishment in Great Britain
  • the work is for the purposes of the business carried on at that establishment
  • the employee is ordinarily resident in Great Britain at the time they apply for or are offered the employment, or at any time during the course of employment.

It may therefore be possible for an employee to bring a race discrimination claim in this country, even if they are barred from bringing an unfair dismissal claim arising out of the same employment.

This is not the last word on this matter. Serco is due to be heard by the House of Lords. Hopefully, it will provide more practical guidance on what it really means to be employed in Great Britain.

Learning points for HR

Do not assume that just because an employee works abroad they will not have the right to bring an unfair dismissal claim, even if they spend most of their working time outside of this country. A dismissal during a single short absence abroad will not normally exclude an unfair dismissal claim.

Review any contractual documents carefully in light of the Court of Appeal’s observation that where an employment contract ‘bases’ an employee will help to determine whether or not they are employed in Great Britain.

Remember that employees may be able to bring claims in the host country as well. Seek advice from lawyers in the relevant country prior to a dismissal to minimise the risk of claims.

Sue Nickson is partner and international head of employment, Hammonds

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