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