A recent UK case has seen the Employment Tribunal take the unusual step of reaching into Australia and granting one of its residents the right to claim unfair dismissal in the UK.

The individual in question worked exclusively in Australia, having relocated voluntarily (for family reasons) from the UK, was subject to the Australian tax and pensions regimes (paying no British taxes at all), and came back to London to work perhaps once or twice a year for short duration. Yet because that employee was employed by two British organizations, she was found to have employment rights in the UK.

Mrs. Lodge brought a claim in the London Central Employment Tribunal for unfair dismissal and detrimental treatment for making a protected disclosure (whistleblowing). Before her claims could be heard, an Employment Judge first considered, at a preliminary hearing, whether she had the right to bring them.

His answer was “no” and Mrs. Lodge appealed to the Employment Appeals Tribunal (EAT). The EAT found otherwise, and gave Mrs. Lodge permission to proceed with her claims.

So why did Mrs. Lodge have the right to make her case in a British Employment Tribunal, when she lived and worked permanently in Australia, and didn't even pay taxes in Great Britain?

The short answer is: because her connection with Great Britain was sufficiently strong.

As you might expect, cases like these turn on their particular facts. In this case, the factors that the judge found compelling and which established this strong connection were that:

  1. All of the work Mrs. Lodge did, whilst undertaken in Melbourne, was for the benefit of the Company in London (and there was no local branch or business involved);
  2. Mrs. Lodge had no recourse to the Australian equivalent to the British Employment Tribunal;
  3. She raised a grievance with the Company which was heard in London, as was her appeal; and
  4. On analysis of the facts, there was no difference between an employer posting an employee abroad with her consent (which is, in broad terms, a more readily recognised category of employee with standing in British tribunals), and an employee who requested, and whom the employer agreed, may work abroad.

The EAT felt that, on a proper application of the law, Mrs. Lodge did not lose her right to bring her claims, just because she worked as a virtual employee in Australia, rather than as a physical employee in the Oxford Street office in London

This case is a useful reminder of the long arm of the British Employment Tribunal, which in this case stretched to the other side of the world, enabling an Australia based employee to claim against a British employer. Remember that, just because an employee is physically working in another country, does not mean they don't still have British employment rights provided there is a sufficiently strong connection to the UK. If you receive a request for an employee to relocate–and IT developments are making remote-working like this more and more possible–remember that you need to consider the risks before you agree. And if you do have employees working for you abroad, be sure to treat them no less favourably than the rest of your team.

Everyone Benefits

We face two quite significant changes in the law in the UK in relation to employees in 2015.

The first is the introduction of Shared Parental Leave (SPL). This comes into effect for babies born in April this year and puts in place a system to encourage men to take an active role in caring for their child in the first year of its life.

In the UK, all mums (including adoptive mums) are entitled to a year off work on the birth (or placement for adoption) of their child. Subject to certain basic eligibility requirements, the mums are also entitled to maternity pay of six weeks at 90% of basic pay and then statutory maternity pay of around £138 a week for another 33 weeks (39 weeks total).

The new SPL regime allows the parents to share the 12 months’ leave (minus the first two weeks which are compulsory for the mum) and 37 weeks' pay, between them in a manner that suits them best.

This all sounds very attractive and forward thinking but there are a few bumps in the road to full equality of child rearing yet. Firstly, this system of SPL replaces a system of additional paternity leave which has been in place since 2011 and which allowed fathers to take the second six months of the mother's year of leave. This had a 0.8% take up in the UK which is hardly a cultural shift. The UK government predicts a 2-8% take up of SPL, but even these low figures are largely viewed as optimistic.

The other problem is the sheer unbelievable complication of the legislation. To even understand the SPL regime, one needs to sit for 48 hours in a darkened room with a flannel on your head. It is hard to see how such a complicated regime could ever be accessible enough to get sufficient traction to create the cultural shift it is designed to effect.

And as if that isn’t enough, one issue that has already arisen relates to what employers should do about enhanced maternity pay programmes–so payments made by employers above the statutory requirement. Should this benefit now also be offered to the fathers taking SPL, thereby potentially more than doubling the cost of providing a previously limited benefit, and will not doing so create discrimination risks?

Many very large employers have already come out and said they will extend the benefit to men for the purpose of SPL, but for the others, a wait and see approach seems to be the current approach of choice, with early case law indicating that it is fine not to extend the benefit to the dads.

Holiday Pay

The other significant change employers are going to have to grapple with comes from a series of cases which have looked at how you calculate holiday pay in the UK.

Under the Working Time Regulations 1998, all UK employees are entitled to paid holiday of 5.6 working weeks. Unlike in many countries, this is viewed as a health and safety measure and anything which discourages employees from taking time off is viewed as problematic from a health and safety perspective.

For a full time employee, this entitlement equates to 28 days’ paid holiday per year which can include the 8 statutory Bank Holidays. Up until recently, holiday pay was usually calculated on the basis of basic pay but these recent cases have decreed that for employees who earn commission and for employees who do regular overtime, holiday pay should be calculated on the basis of their ‘normal remuneration’ instead. Employers are therefore expected to include an element in holiday pay in respect of commission and overtime because not doing so would be a disincentive to an employee to take time off, which is contrary to the intention of the Regulations.

Unfortunately there is a distinct lack of clarity as to how one calculates ‘normal remuneration’. The main question still unanswered is over what reference period you calculate normal remuneration. A reference period of 12 weeks is used in other areas but with commission and overtime, only using 12 weeks could lead to an unsatisfactory result, if, for example, an employee received a particularly large commission payment in the 12 weeks prior to their holiday period.

This question and others are all still waiting to be answered. In the meantime large employers are already calculating holiday to include commission and overtime and are doing so generally by reference to a period which is representative (not necessarily 12 weeks) and which works best for them, to reach the normal weekly remuneration figure for their employees.

This matter continues to go through the Courts so we will update you in due course.