UK Employment Tribunals: Open to All?
December 2001
In a dispute between a UK employee and their UK employer, the employee would naturally seek the protection of UK law. However, given the increasingly mobile workforce and global economy it is becoming more common for employees to work overseas and for overseas companies to have branches or subsidiaries in the United Kingdom. What then, is the position where there is an employment dispute and either the employer or the employee or both are based overseas or where an employee has worked for part of their employment in the United Kingdom? Would an employee in any or all of these circumstances have the right to bring a claim in the UK courts or Employment Tribunals seeking employment protection under UK law?
The legislation protecting employees against unfair dismissal and discrimination on the grounds of race, sex and disability was, until fairly recently, reasonably clear and quite restrictive concerning who could avail themselves of this protection. Prior to its repeal, Section 196 of the Employment Rights Act 1996 (ERA) provided that only employees who "ordinarily worked" in Great Britain could bring a complaint of unfair dismissal or enforce maternity leave and other rights. Similar provisions in the UK discrimination legislation limited protection to those employees working "wholly or mainly" in Great Britain.
The effect of S196 can be seen from the case of Carver v Saudi Arabian Airlines [1999] IRLR 371. Mrs. Carver, a UK citizen, was employed by Saudi Arabian Airlines as a flight attendant. Mrs. Carver’s contract was stated to be subject to Saudi law and provided that her employment could be terminated without notice if she became pregnant. Mrs. Carver trained to be a flight attendant in Jeddah. She worked from Bombay for four years then from London for five years. When Mrs. Carver became pregnant, she resigned from Saudi Arabian Airlines and claimed constructive dismissal and discrimination on the grounds of sex. Under S196 the court found that Mrs. Carver "ordinarily worked" outside Great Britain as in applying the test of where Mrs. Carver "ordinarily worked" on the basis of previous case law the court considered where Mrs. Carver was based at the date of entering into the contract. This excluded Mrs. Carver from bringing a claim.
The Change
About two years ago, changes were made to this UK legislation in order to implement European law, substantially widening the group of employees who could take advantage of such legislation. The underlying European law, the Posted Workers’ Directive, provided for the leveling upwards of employment terms in European Community countries. The directive requires Member States to ensure that, in certain prescribed circumstances, workers posted to another Member State are entitled to, at least, the same basic terms and conditions as workers employed in that Member State. Section 196 ERA (the limiting provision for basic employment rights) was, therefore, repealed, removing the territorial restriction which had prevented those who ordinarily worked outside Great Britain from enforcing rights under the ERA. Nothing was inserted in its place.
The territorial limits in the discrimination acts were also amended substituting the limitation excluding those who worked "wholly or mainly" outside Great Britain from bringing claims to one excluding only those working "wholly" outside Great Britain.
Applicable Law
What do the repeal of section 196 ERA and the changes to the discrimination acts mean in practice? Who is entitled to bring a claim of unfair dismissal and discrimination or to enforce the other rights provided under the ERA in the UK Employment Tribunals? The tribunals have found this a surprisingly difficult question to answer.
The Department of Trade and Industry’s guidance on the repeal of section 196 ERA states: "In spite of its removal, international law and the principles of our own domestic law will ensure that UK legislation does not apply in inappropriate circumstances." This reflects what was said in parliament. Is this, in fact, the case? As the statute is now silent, what is there to stop an individual with no connection with the United Kingdom from bringing a claim in the UK Employment Tribunals?
In one such case, the Employment Tribunal found that "all employees who were working inside or outside the UK have a right to bring a claim to the Employment Tribunal." This case has not been appealed. What about a Japanese business man working for a Japanese company in Japan? Could he bring a claim for unfair dismissal in the UK Employment Tribunals? On the finding of this Employment Tribunal it would appear that he could.
A more recent Employment Tribunal case found that Article 6 of the Rome Convention on the Law Applicable to Contractual Obligations applied. The Rome Convention has been incorporated into English Law by the Contracts (Applicable Law) Act 1990. Article 6 of the Rome Convention deals specifically with employment contracts and provides that the law that applies is that of the country in which the employee habitually carries out their work or the place where the business through which they were engaged is situated unless it appears from the circumstances as a whole that the contract is more closely connected with another country in which case the contract shall be governed by the law of that country. In this case it was found that although the employees were employed under U.S. contracts, it was considered that their employment was more closely connected with the UK than the United States so they could bring a claim in the UK Employment Tribunal.
Another argument is that the Rome Convention does not apply at all to such issues on the basis that Article 1 of the Rome Convention provides that the convention applies to the law relating to contracts only. Therefore, if this view is correct, the Rome Convention cannot be used to determine the application of statutory rights. The rights under the ERA, such as protection against unfair dismissal and rights on maternity, are statutory rights and do not arise by virtue of contract. Indeed the statute expressly states that choice of law by the parties is irrelevant. If this argument is correct, then, there is no limiting provision at all and it follows that anyone can bring a claim in the UK Employment Tribunals —clearly not parliament’s intention.
The amendments to the discrimination acts mean that any employee of an entity with a branch or subsidiary in the United Kingdom can bring a claim for discrimination in the United Kingdom unless they work wholly outside of the United Kingdom. It is arguable, therefore, that an employee who spends time on a business trip in the United Kingdom but otherwise works outside the United Kingdom could bring a discrimination complaint in the United Kingdom. The limitations in these acts are now very narrow indeed.
The most extreme interpretation of the Employment Rights Act, but which has been applied by at least one tribunal, is that the test for jurisdiction may be interpreted even more widely than in relation to discrimination, i.e. there is nothing in the legislation preventing any overseas employee from bringing a claim against an employer with a place of business in the United Kingdom. Even if the less extreme interpretation (applying Article 6 of the Rome Convention) applies, then it will still have major implications.
The repeal of S196 has clearly not had the effect that the UK parliament thought it would have, i.e. to make this area less complex but to ensure that English employment rights did not apply in inappropriate circumstances. This area of the law is now far from clear and on some interpretations of the current state of the legislation the basic employment rights will certainly apply in inappropriate circumstances.
There is provision in the Employment Rights Act which gives the Secretary of State power to make amendments to the Act. This could be used by the legislators to bring clarity to this area of the law and introduce sensible limitations.
Meanwhile, companies based overseas, with UK branches and subsidiaries, and UK companies with overseas employees should take account of the widened application of the protection afforded to employees in this employment area. They should make efforts to apply fair and non-discriminatory employment practices throughout their workforce bearing in mind, however, that what may be considered fair and non-discriminatory in one country may be different from what is considered fair and non-discriminatory in another.
