Decision: Where an employee is based in the UK, any dispute about his employment contract must be brought before the UK courts. This principle applies where the employer is based overseas and where the contract is stated to be subject to the law and courts of another country. In addition, disputes linked to an “employment contract”, are interpreted widely to include share and stock plans operated by parent companies. In this case, an English employee was sued in the US by his employer’s holding company in relation to a US stock plan which had a US exclusive jurisdiction clause. The UK court held that the employee should have been sued in the UK and granted an injunction restraining the US proceedings.
Impact: International employers with (e.g.) US parent companies will often operate stock plans governed by US law. This case confirmed that, where those plans are extended to UK employees, then they will have to be enforced in the UK courts. This can be particularly important if the plan contains forfeiture provisions or restrictive covenants, as the UK courts adopt a much stricter approach to these than, for instance, the US courts. Even if the plan is said to be governed by US law, the UK courts will apply UK principles of restraint of trade and international employers in such a position are well-advised to tailor such covenants to the laws of the country in which the employees are based.
Petter v EMC Corporation