February 2006

Do employees working abroad have the right to claim compensation for unfair dismissal under British Employment Law?

When a British worker is considering making a claim against a British firm for unfair dismissal he or she would use the British tribunal system. However if the job involves working abroad should they pursue the claim in Britain or under the laws of the country they were working at the time of dismissal?

Lord Hoffmann has provided useful guidance for companies that employ workers overseas. He dealt with three cases of unfair dismissal in one judgment. Two of them concerned expatriate employees and the third concerned an employee who travelled around the world to perform his work.

In the cases of the expatriate employees, both employer and employee had close connections with Britain but all the services were performed abroad. In the case of the person who travelled around the world, the employer was a foreign company and the employee was based in Britain. The question to be answered was whether these employees have the right to be protected under British law for unfair dismissal.

Lord Hoffmann rejected the traditional approach and said that the application of the unfair dismissal rules should now depend on whether the employee was working in Britain at the time of their dismissal rather than upon what was contemplated at the time the person entered into a contract of employment. This would now reverse the injustice of an earlier case involving a flight attendant who, despite having moved to London which had become her base at the time of dismissal, was denied the protection of British Employment Law because her contract said she would be based in Jeddah.

The person who travelled around the world was an airline pilot who was described as an extreme example of a peripatetic employee. He worked all over the world and thus potentially had contact with many different legal systems. In this case there was sufficient evidence to show that the base of the pilot's contract was Heathrow airport and it was decided that British law applied to his contract. However in the case of expatriates different considerations apply. Lord Hoffmann conceded that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British Employment Law. However, he identified three possible circumstances which such exceptional cases might ordinarily have.

He considered the situation where the employer would normally be based in Britain and recognised that this would not in itself be sufficient if the employer was a branch of a foreign company. He also considered the situation where an employee may be posted abroad by a British employer for the purposes of a business in Britain. He also considered where an employee could be the expatriate employee of a British employer who is operating within what amounts, for practical purposes, to an extra-territorial British enclave in a foreign country. It was decided that an employee working abroad might well have independent claims under local employment law, but any compensation paid under a foreign system would have to be taken into account by a British Employment Tribunal.

These types of cases are complex and it is important that employers and employees, particularly those that frequently work abroad, know their rights when considering whether there is a case for unfair dismissal.

Lord Hoffmann's full judgment is available via this link.

Stephen Morrall and his colleagues at Middleton Potts have produced an excellent document which provides a commentary on Lord Hoffmann's judgment. Middleton Potts is an eleven partner legal practice. Click this link to view a copy of the document.

Who is this e-mail from?
This e-mail has been sent to you by UK Training (Worldwide) Limited.