Protection Against Unfair Dismissal When Working Abroad

The House of Lords has clarified the position as to when an employee who works wholly or partly outside Great Britain can bring a claim of unfair dismissal before an Employment Tribunal (ET).

Under section 94(1) of the Employment Rights Act 1996 (ERA), an employee who has worked continuously for one year has the statutory right not to be unfairly dismissed. Section 196 of the ERA contained a limitation that this right did not apply where the employee ordinarily worked outside Great Britain. However, this section of the Act was repealed by the Employment Relations Act 1999 and the territorial limit was removed as otherwise workers posted to Great Britain would not have been protected and the UK would have been in breach of the EC Posted Workers Directive. As a result, several unfair dismissal claims were made by employees working abroad, with varying outcomes. After a variety of inconsistent decisions, clarification of the ET’s territorial jurisdiction was needed.

The House of Lords heard three appeals jointly. In each case, the employee seeking to assert UK statutory employment rights had been working abroad at the time of their dismissal and wished to claim unfair dismissal in accordance with s94(1) of the ERA.

Serco Ltd. v Lawson
Mr Lawson was employed on Ascension Island, a dependency of the British Overseas Territory of St Helena, by a UK company with worldwide operations.

Botham v Ministry of Defence
Mr Botham was employed by the Ministry of Defence as a youth worker and worked in a variety of bases in Germany.

Crofts and others v Veta Ltd. and others
Veta is a Hong Kong company, and a wholly owned subsidiary of Cathay Pacific (CP), whose sole function is to employ aircrew for CP. CP allowed its aircrew to be assigned to a permanent base outside Hong Kong. Although his services were peripatetic, Mr Crofts was based at Heathrow and lived in the UK.

The Court of Appeal had ruled that Mr Crofts could claim unfair dismissal as he was based in the UK but judged that Mr Lawson and Mr Botham could not avail themselves of s94(1) as they both worked outside Great Britain.

The question to be decided by the House of Lords was: what connection must an employee have with Great Britain in order to claim unfair dismissal in accordance with s94(1) of the ERA?
The House of Lords had to attempt to put a construction on the relevant section of the Act to determine what Parliament appeared to have intended. Lord Hoffman delivered the leading judgment and found as follows:

• historically, UK employment legislation only permitted employees working within Great Britain to claim unfair dismissal in accordance with UK law;
• in order to decide whether an employee was working in Great Britain, his actual place of work at the time of dismissal should be considered, not where his contract originally stipulated that he should work;
• generally, those working abroad were excluded but there were two exceptions:

1. an employee working abroad for an employer which conducts its business in Great Britain (such as a foreign correspondent for a newspaper); or
2. an employee working in a British enclave (such as a military base) in a foreign country.

Accordingly, the House of Lords dismissed Veta’s appeal whilst allowing the appeals of Mr Lawson and Mr Botham. The three employees are now cleared to bring claims before the ET.

Employers should bear in mind that whether or not the ET has jurisdiction to hear a case will depend on how a contract of employment was operating in the circumstances, rather than on the terms of the original contract. However, it is sensible for employers and employees alike to ensure that contracts of employment are carefully drafted, especially when periods of service abroad are considered.”

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.