Adam Lambert, partner in Clyde & Co’s London office, explains why managers throughout the world need to be wary of UK1 employment rights.
Employment tribunals and courts, including the UK Supreme Court, have been labouring over what, on the face of it, should be a simple question: Can an employee, whose job gives them connections in more than one country, make the most of the UK’s sophisticated employment rights?
If you are asked to identify your UK workforce you can picture people based at a UK site, who may or may not travel around a bit, but always end up back home in the UK. However, global employment is not always that simple.
The problem starts with the employment relationship itself. The contract of employment is likely to say what the governing law is. That’s important when you are dealing with rights and liabilities that arise under the contract, such as notice, bonus and restrictive covenants. However, contract rights are supplemented by statutory rights, such as unfair dismissal and various forms of discrimination. It is made clear by legislation that the governing law of the contract does not decide whether the statutory rights apply. You do not avoid UK employment rights simply by careful drafting (although it may still help).
In 2006, the House of Lords, in deciding the scope of UK unfair dismissal rights, identified three categories of employees who may be covered:
- Employees working in the UK at the time of the dismissal: They will usually be covered (but not always, if the relationship with the UK was “casual”)
- “Peripatetic” employees: For employees who travel extensively; to identify where their true “base” is, we need to look at what happens in practice rather than at their contract
- Expats: Being a UK citizen or having a UK employer is not enough. There needs to be something that makes the connection with the UK stronger than anywhere else. Examples given were: being posted abroad merely to be a representative of the UK employer, or working on what is seen as a UK “enclave”
More recently, and usually in the context of expats, the Supreme Court has focussed on the strength of the connection between the employment relationship and the UK, looking not just at whether the connection is stronger than with any other jurisdiction, but also whether it is strong enough to mean that Parliament intended UK rights to apply. The UK Equality and Human Rights Commission has claimed similar principles apply in respect of discrimination cases.
Tribunals and appeal courts have, in some cases, found the connection to be strong enough even if the employee has never worked in the UK. Factors taken into account have included whether the employer is a UK company, the domestic home of the employee, where tax is paid, whether the case concerns EU rights (rather than just UK rights) and even the employment status of spouses. But the cases and guidelines all make it clear that other factors may be relevant.
It seems, therefore, that the question of whether someone based abroad is covered by UK employment rights is going to be answered by way of example, rather than by clear and reliable rules. This is bad news for international businesses, which may prefer certainty. To clarify any areas of doubt, it is worth taking advice to establish if there is a UK connection in an overseas employment relationship