The EAT has held that a Tribunal wrongly approached the issue of whether an employee who was employed by a UK company, but who lived and worked in Dubai, could bring claims to a UK Employment Tribunal, and has limited the potential for employees working outside the EU to bring claims in the UK based on rights derived from EU law.

Background

The Employment Rights Act 1996 ("ERA"), which includes the right to claim unfair dismissal, is silent as to its territorial scope. In Lawson v Serco [ 2006 ] the House of Lords said that the normal case in which the right to unfair dismissal would apply was where an employee was working in Great Britain at the time of their dismissal.  However, they identified 3 further potential categories of employees who might be able to bring a claim, namely:

  • peripatetic employees whose base was Great Britain at the time of dismissal;
  • expatriate employees ie those living and working normally abroad but who have "strong connections" to both Great Britain and British employment law eg those posted abroad by a British employer for the purposes of a business carried on in Great Britain; and
  • other employees who do not fit into the above categories but who have "equally strong" connections with Great Britain and British employment law.

In the more recent case of Ravat -v-Halliburton Manufacturing and Services Ltd [ 2012], the Supreme Court held that although these categories were helpful, they were merely examples of the types of employee who might demonstrate the requisite link to Great Britain. The Supreme Court held that one generic question should be asked ie is the connection with Great Britain "sufficiently strong" to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to hear the claim?

Where rights derive from EU law, the EAT has held that a worker based outside Great Britain but within an EU Member State was able to pursue a claim in a UK Employment Tribunal on the basis that UK courts and tribunals have to give effect to "directly effective" EU rights, where UK law was applicable to the contract.  This was said to include rights derived from the EU Working Time Directive, ( see Bleuse  -v- MBT Transport Ltd [2008]). 

In the case reported below, the EAT considered the extent to which an employee based outside both Great Britain and the EU was able to bring claims in the UK for unfair dismissal, breach of the right to be accompanied at a disciplinary hearing and unpaid holiday pay.

Dhunna v Creditsights Ltd

Mr Dhunna was employed as a salesperson by CreditSights Ltd ("Creditsights"), a UK company. The company was a subsidiary of a US parent company, CreditSights Inc., based in New York. The Creditsights group provided independent investment research to institutional investors around the world.

Mr Dhunna did not have a written contract of employment, but did have an offer letter, signed by the UK company. He had also entered into a non-solicitation and non-competition agreement which was governed by English law.

Although Mr Dhunna was initially based in London, and was described as a member of the European sales team, he subsequently transferred to work at a newly-opened branch of Creditsights in Dubai, dealing solely with EMEA clients.  He remained on the payroll of the UK company but was then paid in US dollars, rather than in dollars converted into sterling as previously. Mr Dhunna was the only employee of Creditsights in Dubai, and he reported to a manager based in New Delhi, who was employed by a different subsidiary of the US parent company.

The Dubai office was established initially as a branch office of London. Sales made in Dubai were handled by the London office, which processed invoicing and payments. The employer's evidence was that the administrative support from London was, however, only intended to be temporary, and that it would be transferred to a new office in Singapore which would act as the employer's hub for its Asian business.

After living and working wholly in Dubai for some 8 months, Mr Dhunna was dismissed. He brought claims to a UK Employment Tribunal for unfair dismissal, breach of the right to be accompanied at a disciplinary hearing, and unpaid holiday pay under the Working Time Regulations ("WTR").

Employment Tribunal

At first instance, the Employment Tribunal held that it lacked jurisdiction to hear the ERA claims of unfair dismissal and breach of the right to be accompanied, (the parties having agreed that the test was the same for both claims).  As regards the claim for unpaid holiday pay however, the Tribunal applied Bleuse ( see Background), and held that it had jurisdiction to hear the claim.

Both Mr Dhunna and the UK company appealed.

Employment Appeal Tribunal

Unfair dismissal/Right to be accompanied

As regards the ERA claims, the EAT held that the Tribunal had not properly asked the question set out by the Supreme Court in Ravat, (see Background).  The EAT summarised the principles to be applied in deciding whether an employee who lives and works abroad falls within the territorial scope of the unfair dismissal legislation:

  • The overarching question is whether Parliament intended the legislation to apply to a person in the employee's situation;
  • The general rule is that the place of employment is decisive; but
  • where the employment has much stronger connections with both Great Britain and British employment law than with any other system of law the Claimant will be within the scope of the legislation if the connection is sufficiently strong;
  • the comparative exercise is appropriate where the employee is employed wholly abroad- the comparison is between Great Britain and the jurisdiction in which the employee works;
  • the country in which the employee lives is relevant.  If he lives as well as works abroad, an especially strong connection with Great Britain and British employment law is required before an exception can be made for him;
  • when the employee lives and/or works for at least part of the time in Great Britain, the comparison of connections with Great Britain and with the country in which he works is not required.  All that is required is a sufficiently strong connection to enable it to be said that Parliament would have regarded it as appropriate for an Employment Tribunal to deal with the employee's unfair dismissal claim.

In this case, the Tribunal had not correctly considered the relative strengths of the connections that Mr Dhunna had with Great Britain on the one hand, and with the country in which he lived and worked at the date of his dismissal, ie Dubai, on the other.  Both ERA claims were remitted for rehearing by a different Tribunal.

Holiday pay

The EAT found that the Tribunal had also erred in holding that the claim for unpaid holiday pay could proceed.  This was on the basis that the WTR contain an express territorial restriction, which states that they extend to "Great Britain only". Therefore they clearly did not extend to Dubai. Further, there was no scope to extend jurisdiction along the lines suggested in Bleuse (see background), because Mr Dhunna worked outside the EU. The Tribunal had not identified any provision in the Working Time Directive, or indeed in any other EU law, which would lead to the Working Time Directive having effect in respect of employees working outside the EU.

The appeal on this issue was allowed, and the holiday pay claim dismissed

Comment

The case reflects the continuing uncertainty and complexity as to the territorial scope of UK employment law.  The approach taken to the scope of the ERA is unsurprising.  Tribunals now take a wider approach to considering the circumstances where someone not working in Great Britain might be covered by British employment law; they will seek to apply a general test rather than looking to match the case to previously identified categories of employee who are protected. 

The EAT's decision that the scope of the WTR is expressly limited to Great Britain is open to question.  This argument was considered and rejected by the EAT in Bleuse on the basis that the words in question simply meant that the Regulations form part of the law of Great Britain but do not extent to Northern Ireland, and there is similar wording in the ERA.

Perhaps of greater interest is the EAT's finding that the Bleuse principle on EU-derived rights does not extend to employees working outside the EU. This is the first appellate authority to have reached a decision the point.  This is a helpful decision but it was dealt with very briefly by the EAT and the Supreme Court has previously indicated that the matter would need to be determined by the European Court. For this reason, we may see future argument on this issue.