Two recent Employment Appeal Tribunal ("EAT") decisions have provided conflicting decisions on the jurisdiction of Employment Tribunals to hear claims by individuals working outside England and Wales.
In Serco Ltd -v- Stephen Lawson the EAT held the tribunals did have jurisdiction to hear the claim of an individual who worked for Serco in Ascension Island on the grounds that the Respondent carried on business in England and Wales. The EAT held it was not relevant that Mr Lawson actually worked outside the UK. The EAT also said that the lack of an express choice by the parties stating UK law would govern the contract of employment as applying the provisions of section 204 of the Employment Rights Act was immaterial.
This decision can be contrasted with that of the EAT in Bryant -v- The Foreign and Commonwealth Office. In this case the EAT found that the Tribunal did not have jurisdiction to entertain Mrs Bryant’s claim arising out of her employment in Italy for the Foreign and Commonwealth office. The EAT appears to have based its decision primarily on the fact that the Employment Rights Act does not specifically state that the right to claim unfair dismissal available where the individual works outside of England and Wales. The written reasons of the EAT’s decision provide little in the way of reasoning.
Effect for employers
These two decisions were made within 24 hours of each other but surprisingly in isolation of each other. It is open to Tribunals to rely on either of the decisions therefore there will be no definitive position until the issue is considered by a higher court i.e. the Court of Appeal.
Until the apparent contradictions in the decisions are clarified, non-UK employers with practices in the UK, or UK companies who operate abroad, need to be aware of the potential for a claim being brought against them in tribunal by an employee based or working outside the UK. Such employees may benefit not only from local practice and labour laws but also rights under the Employment Rights Act (such as unfair dismissal, redundancy payment, maternity rights etc).
What should an employer do?
Employers may consider engaging overseas staff via an offshore company. To avoid jurisdiction of Employment Tribunals applying to the overseas company, the Company should:
- not be registered in the UK with the UK Registrar of Companies;
- "not carry on a business" within the jurisdiction of the UK.
(Although where a company should have registered a place of business in the UK but has not in fact done so, this will not defeat the claim that the Tribunals have jurisdiction).
Whether a company "carries on business" within the jurisdiction, is in essence a question of fact for tribunals to decide. Even where an employer has such an offshore arrangement it is still possible that a Tribunal may seek to find grounds that the employee is, in effect, working for the business based in the UK and, on that basis, has the right to bring a claim.
Where no such arrangement is in place in the UK If there appears to be a recent risk e.g. where the employee may ultimately be returning to the UK, the employer should consider taking steps to minimise the risk by, for example, a fair termination. The Employer could take steps to ensure the requirements of UK legislation are met, or a payment is being made to the employee’s termination.
Employers could also require such an employee to enter into a compromise agreement.