Territorial scope of the right to claim unfair dismissal

Employees employed in Great Britain can rely on the statutory right not to be unfairly dismissed under section 94(1) of the Act. Although the Act does not contain any geographic limitation, the courts have taken the view that some territorial limitation is necessary.

The exact scope of the territorial limitation of the Act has caused much uncertainty when it comes to employees working abroad on a regular basis – either because the employer business has offices outside Great Britain or because the employee is located abroad to support the developing and establishing of business outside Great Britain.

The courts have recognised that there are some situations where an employee working abroad should be able to benefit from the right not to be unfairly dismissed under the Act and in Serco Ltd v Lawson [2006] IRLR 289 (‘Serco v Lawson’) the Supreme Court (previously called the House of Lords) sought to clarify the position by identifying the following categories:

1)     Employees ordinarily working in Great Britain

This type of employees will benefit from unfair dismissal protection if they were working in Great Britain at the time of the dismissal.

2)     Peripatetic employees

Where an employee’s work consists of travelling (for instance pilots and flight attendants), then the courts will view the employee’s ‘base’ as the place of work for the purposes of the Act. In establishing where an employee’s base is, the court will consider the following:

a)    the country in which the employee has his headquarter, or where the travels begin and end;

b)    where the employee has his home;

c)     where the employee is paid and in what currency;

d)    where the employee is subject to National Insurance

For instance, an employee who: works for a Hong Kong airline as a Pilot; lives in Great Britain; is subject to NI contributions in Great Britain; and starts and ends his travels at Heathrow airport was regarded as based in Great Britain for the purposes of the Act even though he technically carried out his work outside Great Britain.

3)     Expatriate employees

It is unusual for an employee who works and lives abroad to be within the scope of the Act. However, in Serco v Lawson the Supreme Court recognised that there are some situations where such an employee should enjoy protection under the Act and gave the example of an employee posted abroad by a British employer for the purposes of a business carried on in Great Britain, such as a foreign correspondent of a British newspaper, who should be entitled to enjoy protection under the Act even though he did not technically have his place of work in Great Britain.

4)     Equally strong connection with Great Britain

The Supreme Court held that, even though they could not think of any other examples than the above categories of employees who should be able to enjoy protection under the Act despite working outside Great Britain, other types of employees might also enjoy protection under the Act if their employment have ‘equally strong connections’ with Great Britain.

In Ravat v Halliburton, the Supreme Court ruled in favour of Mr Ravat and held that although he did not ordinarily work in Great Britain and was not a peripatetic employee or an expatriate employee as identified in the case of Serco v Lawson, he still had sufficiently strong connections with Great Britain to enjoy protection under the Act. The Supreme Court suggested that the question that should be asked when assessing whether an employee based abroad should be entitled to protection under the Act should be: …’whether the connection was sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to deal with the claim’.

The conclusion to be drawn from this case must be that although the courts should assess whether an employee falls under the first 3 categories identified in Serco v Lawson, they should not ‘…try and torture the circumstances of one employment to make it fit one of the examples given…’ but should instead move on to assess whether other factors in the employment relationship mean that there is a strong connection with Great Britain even though the employee’s place of work is abroad.

Where there is a cross-border element in an employment relationship, HR managers should ensure that they consider the possible implications this may have in terms of the applicable law and jurisdiction of the contract in question. Spending a little extra time on getting it right and seeking advice from the outset will no doubt reduce the overall costs when it comes to terminating such a contract in the future. We would also suggest carrying our regular reviews of the actual circumstances of your employees posted abroad to ensure that the documentation in place matches the legal aspects of the secondment/posting abroad.

At ebl miller rosenfalck we specialise in cross-border legal issues and if you have any questions relating to the issues raised in this newsletter or any general employment law queries, please do not hesitate to contact us.

The material contained in this newsletter is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© , March 2012

Please contact:

Sara Kennedy - Solicitor

DD +44 (0)20 7553 9937

View profile »