In Fuller v United Healthcare Services Inc and another UKEAT/0464/13,  the EAT has upheld a tribunal’s decision that a US citizen employed by a US company, who was required to spend around 49% of his time in the UK, fell outside the scope of the Employment Rights Act 1996 (ERA) and the Equality Act 2010.  Therefore he could not pursue unfair dismissal or discrimination claims in an employment tribunal.

Facts

Mr Fuller, a US citizen, was chief operating officer of Optuminsight, part of United Healthcare Services Inc (UHS Inc), which itself was part of United Health Group (UHG).  He worked from his home in Texas.  In January 2012 Mr Fuller became managing director of United Health UK, a subsidiary of UHG.  He retained his previous role but shifted his focus to Optuminsight’s businesses in the UK and Middle East.  A letter confirming Mr Fuller’s “international rotation assignment” stated that he would be based in the US but required to spend approximately 49% of his time in the UK.  If he worked more than 49% of his time in the UK, he would incur greater tax liability, which his employer would pay.  For tax purposes, Mr Fuller kept a log of how many days he spent in the UK, United Arab Emirates and other countries.

The company took a two year lease on a London flat for Mr Fuller’s use, which was cheaper than paying for a hotel.  They paid him a relocation allowance and agreed to pay for his partner to visit him in the UK twice a year.

On 31 October 2012, having returned to the US, Mr Fuller was told that his expatriate assignment was to be terminated.  Mr Fuller then remained in the US.  He failed to secure another role in UHG and was dismissed on 3 January 2013.  He brought claims in the employment tribunal for ordinary unfair dismissal, automatic unfair dismissal in respect of protected disclosures and sexual orientation discrimination.

Employment tribunal decision

An employment judge held that Mr Fuller fell outside the territorial scope of the ERA and the Equality Act so refused to allow his claims to proceed.  With regard to the unfair dismissal claim the judge accepted that, where somebody is ordinarily working in the UK at the time of dismissal, this is “the strongest possible indication that Parliament would intend him to be protected by unfair dismissal law”.  Nevertheless, on the facts of the case there was an overwhelmingly strong connection with the US, rather than the UK.  In reaching her decision, the judge took into account the following:

Mr Fuller’s employment in London “did not constitute a true break with the substantive nature of his previous work, nor did it sever any of the continuities or realities of his existing US employment”.  He maintained his home in Texas, was paid in US dollars and his US terms concerning pension, bonus, holidays and pay rises continued.Mr Fuller’s contract stated that he would be US based but required to spend time in other places, including the UK and the UAE.  The contract was current and reflected the reality of his situation. UHS Inc informed Mr Fuller of his impending dismissal by telephone while he was in the US because they did not want him to receive bad news when he was away from home.  His rotation assignment with the UK aspect ended before the eventual end of his employment.

The employment judge rejected Mr Fuller’s argument that the territorial scope test should be loosened in respect of his whistleblowing claim because of the public interest aspect, concluding that there needed to be a consistency of approach.  Similarly, the employment judge decided that there was no sufficiently close connection to the UK to enable Mr Fuller to pursue his discrimination claim.  As a US citizen employed by a US company, Mr Fuller could not engage rights under European law.

Mr Fuller appealed to the EAT against the tribunal’s findings on unfair dismissal and discrimination.

EAT decision

The EAT rejected Mr Fuller’s appeal.  In the EAT’s view, the key question with regard to ordinary unfair dismissal under the ERA was whether Mr Fuller had given up his base in the US and moved to the UK.  The employment judge made it clear that he had not, despite carrying out work in the UK and other countries.  He had entered into a contract with an “overwhelmingly close connection” with the US.  The employment judge had been entitled to consider all of Mr Fuller’s personal circumstances and to decide that he did not have the required connection with the UK and British employment law for him to be protected against ordinary unfair dismissal.

Turning to Mr Fuller’s other claims, the EAT was not persuaded that the territorial scope test should be less stringent for whistleblowing or for discrimination.  It stated that “there does not seem to be anything in the legislation or case law to indicate such a difference”, adding that if Parliament had intended that employees working only partly in the UK were covered, then it could have specifically provided for this within the legislation.  The fact that it did not suggests that it intended that courts should decide the question of the territorial scope of the Equality Act in the same way as ordinary unfair dismissal law.

Comment

It is, perhaps, not surprising that Mr Fuller brought a claim in a British tribunal.  In the US there is no unfair dismissal protection and the employment relationship can be terminated “at will” by either party.  In Mr Fuller’s case, his contract stated that any employment disputes were to be determined solely by arbitration, administered by the American Arbitration Association.

In the course of its decision, the EAT accepted that “it may be thought to be odd that a person working in this country does not have the protection of discrimination laws applicable to those who may work in the same office as he does”.  The EAT also acknowledged that it may seem odd that the Equality Act 2010, owing to its restricted territorial scope, takes away rights that were available to certain employees pre-2010.  Mr Fuller might well have been protected by the Employment Equality (Sexual Orientation) Regulations under the working “wholly or partly in Great Britain” test.  However, the EAT rejected the argument that Parliament did not intend to reduce the territorial scope of the discrimination legislation.

Employers should be aware that tribunals will look at all of the circumstances surrounding an employee’s assignment, including the contract, when deciding whether there is a connection with one country or another.  Just because an employee is physically present and working in Britain does not necessarily mean that he has severed his ties with his home country nor that he is protected under British employment law.  However, these matters will always be highly fact specific: had Mr Fuller been paid his salary in pounds or been included in UK benefit schemes, it is possible that the tribunal would have reached a different decision.  Employers should therefore always look at these matters very carefully.