The English Employment Appeal Tribunal (the "Appeal Tribunal") recently held that a Hong Kong employee seconded to work in England can bring statutory claims in the English Employment Tribunal (the "Tribunal") against a Hong Kong employer (Pervez v Macquarie Bank (2010)).

Mr Pervez, a bond trader, was seconded on an "international assignment" from Macquarie Capital Securities Ltd ("Macquarie Hong Kong"), a company incorporated and based in Hong Kong, to Macquarie Bank Limited (London Branch) ("Macquarie London"). Macquarie Hong Kong remained the employer. Following dismissal by letter from Macquarie Hong Kong, Mr Pervez commenced proceedings for unfair dismissal and discrimination in England against Macquarie London and Macquarie Group Limited ("Macquarie Group"), the parent company of the group. Macquarie London and Macquarie Group took the view that Mr Pervez was not employed by either of them but by Macquarie Hong Kong. The Claimant therefore sought to join Macquarie Hong Kong to the proceedings. Macquarie Hong Kong argued that it would be futile for it to be joined to the proceedings because the Tribunal had no jurisdiction to entertain a claim against it. To bring a statutory employment claim in England, the defendant must either reside or carry on business in England or the relevant acts or omissions must be alleged to have occurred in England. Here the acts complained of took place in Hong Kong, so there would only be jurisdiction if Macquarie Hong Kong "carried on business" in England. As it did not have an office or branch, nor carry on any transactions, in England, it therefore argued that it should not be viewed as "carrying on business" in England.

The Appeal Tribunal held that the Tribunal did have jurisdiction to entertain claims against Macquarie Hong Kong as the requirement to "carry on business" in England should be construed as satisfied where an employer seconds an employee to work in England. The Appeal Tribunal Judge, on his own admission, accepted that this was a "strained construction" of the relevant legislation but said that it was necessary in order not to deprive this employee of the right to claim under the English employment legislation.

What is the legal position where a foreign employer seconds an employee to Hong Kong?

The Hong Kong case of Murdock v Dresser-Rand Services (2002) looked at the factors to be considered in deciding the extent of the Hong Kong Labour Tribunal's jurisdiction over foreign employers.

Under the Companies Ordinance, the jurisdictional requirement would be met if the defendant had a "place of business" in Hong Kong. The Court found that despite the fact that it had a business registration certificate, filed tax returns and employed staff in Hong Kong, it did not have a "place of business" in Hong Kong because its business was to provide secretarial type services to the group companies and not to the "world at large". As seen above, this is clearly a much stricter test than that applied in the case of Pervez v Macquarie Bank in England.

Practical Consequences

A Hong Kong employer may be deemed to be "carrying on" a business activity in London by simply sending an employee on secondment to a group company in London and can be sued under English employment legislation by that employee.

One way in which a Hong Kong employer might possibly avoid being sued by an employee seconded to a London entity would be to put the employee on a fixed term employment contract with the London entity instead of maintaining a secondment arrangement between Hong Kong and London. Whether a company decides to place its employees on a fixed term contract or a secondment arrangement will depend on the specific business needs and the circumstances of the case. Legal advice should be sought as to which arrangement best suits the company's needs at the time.