A recent House of Lords judgment has extended the scope of British unfair dismissal protection to staff working abroad (Personnel Today 31 January). The Lords reviews examined three cases:
- In Serco Ltd v Lawson Mr Lawson, British and ordinarily domiciled in Great Britain worked for Serco Limited (an English company with a head office in England) on Ascension Island in the South Atlantic. He was recruited from England, but only ever worked for Serco on Ascension Island.
- In Botham v Ministry of Defence Mr Botham was a civilian employee of the MoD on various bases in Germany. He was treated as being resident in Great Britain for various purposes, including taxation.
- In Crofts v Veta Ltd Mr Crofts, a pilot based at Heathrow and living in Great Britain, flew for Veta, which was owned by Cathay Pacific Airways Limited – both Hong Kong companies.
The Lords decided that an employee enjoys unfair dismissal protection in Great Britain if their employment is deemed to be in Great Britain, describing three scenarios:
Working in Great Britain
The primary aspect to consider is whether the employee was working in Great Britain at the time of dismissal. The terms of their employment contract and the historical relationship between employee and employer will also be relevant, to decide whether the employee really was working in Great Britain, or merely on a casual visit when they were dismissed.
Peripatetic employees
Where employees carry out their work in a number of different locations (such as airline pilots), you must look instead at where they were based under both the terms of their contract and in practice.
Expatriate employees
The Lords emphasised that an employee who works abroad and is based abroad will only be able to claim unfair dismissal in exceptional circumstances, and this would be very unlikely unless their employer is based in Great Britain. However, they must also be either:
- posted abroad by a British employer for the purposes of a business carried on in Great Britain (but not an overseas branch of a British business), for example, a foreign correspondent on the staff of a British newspaper.
- an expat employee of a British employer operating within an ‘extra-territorial British enclave’ in a foreign country. These will be truly exceptional circumstances, and the Lords held that they would include a military base in Germany (as in Botham’s case) or an RAF base on Ascension Island (as in Lawson’s).
There may be other cases, but the Lords could not think of any, so they held that Lawson and Botham can bring an unfair dismissal claim. Crofts may also claim, as he was based in England.
Key implications
Be aware that staff who do all their work for you abroad may nevertheless enjoy unfair dismissal protection if they are, in practice, based in Britain, or if they are posted abroad by you for the purposes of your British business.
The position may be different if such employees are working for a business conducted in the foreign country with British owners, or that is a separate branch of a British business. They would be unlikely to have unfair dismissal rights.
Remember that unfair dismissal protection only applies to employees in the strict sense. It does not cover ‘workers’ – such as genuine freelancers, consultants or agency temps – unless they are, in reality, employees.
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Employees working overseas may benefit from employment protection legislation in the foreign country anyway. These rights may be significantly wider and provide more generous protection than those of Great Britain. Also, the Lords acknowledged that their decision may mean that some employees are now able to bring claims in Great Britain and elsewhere in respect of the same employment. However, they will not be able to recover compensation in Great Britain for the same losses twice.
The new principle means that the territorial scope of unfair dismissal protection is now closer to that of discrimination claims.
Go to www.personneltoday.com/33671.article for last week’s story on the House of Lords ruling
