Claims of Unfair Dismissal in the UK by Employees of Foreign Employers Who Work Abroad?

The territorial scope of the Employment Rights Act 1996 has been the subject of litigation in the highest courts in the UK for some years. The Act is silent on its geographical scope.  This has created uncertainty for UK based employees working abroad and for the employers posting them abroad.

In 2006, the landmark House of Lords decision, called Lawson v Serco, was handed down.  Lord Hoffman sought to categorise UK employees working abroad who would have the right to complain of unfair dismissal as either (i) peripatetic employees who move between jurisdictions but are essentially based in the UK (ii) expatriate employees who have been posted abroad by a British employer to further the business of that employer abroad and (iii) expatriate employees working in a British political or social enclave. A debate has raged ever since as to whether these categories were exhaustive, with conflicting and confusing decisions being issued from the EAT and Scottish and English appellate courts. The Supreme Court has finally had an opportunity to resolve this issue and has confirmed that it is not for the courts to lay down fixed rules as to when these statutory protections apply.

In a much anticipated judgment, Ravat v Halliburton and Services Ltd, Lord Hope delivered the leading judgment of the Supreme Court and held that whether the Employment Tribunal in the UK has jurisdiction to hear a complaint of unfair dismissal must be answered by:

determining whether the employment relationship has a stronger connection with Great Britain than with the country in which the employee works.

The Supreme Court emphasised that the question of jurisdiction should be one of "fact and degree" involving an overall assessment of the circumstances and that those who are truly expatriate will require an especially strong connection with Great Britain before an exception will be made.  Factors that were determinative in Mr. Ravat's case were that he was ordinarily resident in the UK, and was paid expenses and salary into a UK bank account in sterling.

This decision may have implications for employers who have international employees and it may be advisable to review existing arrangements. An employee who retains strong connections with Great Britain may be able to claim unfair dismissal in the Employment Tribunal, despite working abroad for a foreign employer.