"Yes", says the Supreme Court in a unanimous decision handed down on 8 February 2012 in Ravat v. Halliburton Manufacturing and Services Limited.
The judgment confirms the majority decision of the Court of Session (the Scottish equivalent of the Court of Appeal) that an employee who lived in Great Britain but worked in Libya on a “one month on, one month off” rotational basis qualified for unfair dismissal protection under the Employment Rights Act 1996 (the ERA). The majority had adopted different approaches to the guidelines on the territorial scope of the ERA set out in Lawson v. Serco. The Supreme Court’s judgment therefore brings welcome clarity to the question of the territorial jurisdiction of the ERA.
The ERA does not contain any limits on its geographical application, so there has been confusion about the correct test for establishing its territorial scope. In 2006, the House of Lords in Lawson identified three categories of employee who could qualify for unfair dismissal protection under the ERA:
- Standard cases, where the employee lives and works in Great Britain.
- Peripatetic employees, who work in different jurisdictions but have their base in Great Britain (e.g. airline pilots and travelling sales staff).
- Expatriate employees, who are, for example, those posted abroad to further the business of a British employer (e.g. a foreign correspondent of a British newspaper).
An employment tribunal found that it had jurisdiction to hear Mr Ravat’s unfair dismissal claim, as, although he did not fall within any of the three categories identified in Lawson, there was a "sufficiently substantial connection" between the employment relationship and Great Britain. However, that decision was set aside by the Employment Appeal Tribunal, when it held that the tribunal had adopted the wrong test. It found that Mr Ravat was an "expatriate employee", but that he did not qualify for unfair dismissal protection because his work did not further the business of a British employer. Mr Ravat successfully appealed to the Court of Session.
Mr Ravat, a British citizen living in Lancashire, was employed by Halliburton for 16 years until his redundancy in 2006. From March 2003, he worked in Libya for a German subsidiary of Halliburton’s parent company. At this time, he worked a rotation of 28 consecutive days in Libya, followed by 28 consecutive days at home. While at home he carried out a small amount of work for Halliburton. This rotational work pattern was under Halliburton’s "international commuter assignment policy", which differed from the company’s arrangements for expatriates who worked and lived abroad. Mr Ravat’s employment contract was subject to UK law and Halliburton assured him that he would continue to have the full protection of UK law while working abroad. He was kept on the UK pay and pensions structure that Halliburton applied to other UK-based employees and was paid in sterling after the deduction of UK income tax and national insurance contributions. All the contractual aspects of his employment, including payroll and grievance procedures, and the redundancy process when his employment ended, were dealt with from Halliburton’s headquarters in Aberdeen.
The Supreme Court dismissed Halliburton’s appeal and confirmed that Mr Ravat did have the right to claim unfair dismissal. The case will be sent back to the Employment Tribunal to deal with the merits of his claim.
The Court confirmed that the three categories set out in Lawson v. Serco are not exhaustive and the correct test is whether the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although the employee was working abroad, Parliament must have intended that the ERA should apply to them. The Court also said that it will always be a question of fact and degree whether the connection is strong enough to overcome the general rule that the place of employment is decisive.
For Mr Ravat, the factors the Court considered significant were that:
- Halliburton’s business was based in Great Britain;
- Halliburton chose to treat Mr Ravat as a "commuter";
- Mr Ravat received the same benefits that he would have received had he been working in Great Britain and paid UK income tax and national insurance contributions;
- Halliburton assured Mr Ravat that UK employment law would continue to apply to him and the employment relationship was conducted as if UK employment law applied; and
- Mr Ravat’s home was in Great Britain.
Impact for Employers
Employers should not assume that employees working abroad are not covered by British employment law. Factors such as those listed above may influence the outcome, but it is a question of degree and each case will depend on its own specific circumstances. Employers who wish to weaken the connection between the employment and Great Britain to minimise the risk that an overseas employee can raise claims in an employment tribunal should consider taking measures to show the employment relationship is not governed by UK law. This could include: engaging employees via offshore companies; paying employees in a local currency rather than sterling and subjecting them to local tax laws; excluding employees from UK reporting lines; and expressly labelling them as “expatriate” employees. However, even such measures may not defeat claims by employees in circumstances similar to Mr Ravat, where there are strong grounds for arguing that he should not be denied rights under British employment law.