Green v SIG Trading Ltd UKEAT/0282/16

Why care?

As the Employment Rights Act 1996 is silent as to the territorial scope of unfair dismissal the courts have provided some guidance as to whether or not an employee working overseas has the right to claim unfair dismissal in the UK courts. Previous cases have identified various categories of overseas employee who might be protected by unfair dismissal law. These may include “expatriate employees” who are employed by a British employer but who live and work entirely or almost entirely abroad or where an employee’s place of work is not Great Britain but has a sufficiently strong connection with Great Britain to bring him within scope.

In this case the EAT considered whether a British citizen employed by a British company, who worked remotely in Saudi Arabia (SA), had unfair dismissal protection.

The case

Mr Green is married to a Lebanese national and has lived (with his family) in the Middle East for over 15 years (he has no private residence in the UK). In 2013, while living abroad, he started work as a consultant for SIG Trading Limited (SIG), a limited company registered in the UK and a subsidiary of a UK plc. In 2014, he became Managing Director for SIG’s business in SA and although he continued to live in Lebanon he commuted to work in SA for two to four days at a time, with SIG then paying for his accommodation in SA. Occasionally he also came to the UK for work.

Although SIG registered Mr Green with HMRC and paid him in pounds sterling, he was treated as exempt from UK tax or national insurance contributions. Mr Green’s contract was expressly stated to be governed by English law (and his claim for breach of contract had been permitted to proceed in the employment tribunal) and referred to British employment legislation and UK policies.

Due to poor financial performance, SIG decided to close its business in SA and SIG’s UK board of directors took the decision to dismiss Mr Green for redundancy which was carried out by SIG’s UK HR Director. Mr Green brought a claim for unfair dismissal in the employment tribunal.

The tribunal dismissed his claim on the basis that it did not have jurisdiction to hear it, concluding that there was not a strong connection between the Claimant’s employment and Great Britain and British employment law. The tribunal accepted SIG’s evidence that it had used its standard UK employment contract for Mr Green only for reasons of “convenience”. In reality he was an expatriate employee, not working for the benefit of a business in Great Britain but developing a new business in SA with stronger connections to SA and the Middle East pursuant to local laws and customs rather than connections to Great Britain. The tribunal found the fact that his dismissal had been handled by the UK business was not a factor pointing towards a strong connection with Great Britain but was something done simply for “pragmatic” reasons.

Mr Green appealed to the EAT and his grounds included that the employment tribunal wrongly had regard to what it found to be the subjective intention of SIG (its reason for using a British contract “for convenience”, for example), rather than applying an objective test. The EAT allowed the appeal.

It said that the assessment of whether Mr Green’s employment has a stronger connection with Great Britain and British employment law or SA must be viewed objectively. It was a material fact that Mr Green’s employment contract was expressly stated to be subject to English employment law and it was accepted by the parties that the contractual term on governing law was binding.

The tribunal might have been entitled to disregard references to British statutory protections, or post-termination covenants that related to “UK and Ireland territories” as examples of standard terms and conditions from SIG’s “off the shelf” contract. However, the fact that the agreement was stated to be subject to English law and referred to British employment law was not a factor that could be discounted as a matter of “convenience” since it did not have a standard form appropriate for SA.

The EAT did find that the tribunal’s conclusion that there was UK based management decision making concerning the redundancy was sound – this was simply a pragmatic arrangement allowing for the fact that the SA business was newly founded. Additionally, SIG did not have any other organisational support in SA at that stage and said little about the connection between Mr Green’s employment and Great Britain.

The case was remitted to the employment tribunal for reconsideration.

What to take away

We will have to wait for the decision of the employment tribunal to which this case is being remitted to find out whether in this case there is a strong connection between Mr Green’s employment and UK employment law. However, the very fact there was a dispute is a salutary lesson to employers providing “off the shelf” standard term contracts for overseas employees rather than ensuring they fit the particular circumstances required. It is clear that an objective assessment will be undertaken by the courts rather than them accepting plausible, but possibly subjective explanations by employers for their actions.