Rights of cross-border workers

October 31, 2018

Can workers based abroad bring claims in the UK Employment Tribunals?

Yes, sometimes this is possible according to the recent decision of the Court of Appeal in The British Council v Jeffery & Ors [2018] EWCA Civ 2253. In today’s world it will hardly be surprising to anyone that many businesses disregard geographical boundaries and have teams of employees spread across the world to ensure resources are optimised and projects are delivered with a competitive edge. Technology plays a big part in this, making it relatively straight forward to accommodate and manage international teams, allowing function and project – not territory – be the focal point. However, what happens if the relationship turns sour and what are the risks if an employee becomes disgruntled? Will an employee’s employment be governed by the laws of the country in which he or she is based or will it be where the employing company is based? The outcome of a claim will be substantially different depending on which country’s laws will apply and which jurisdiction the employment relationship is deemed to fall into. It is therefore critical – at the outset – to analyse the likely applicable law and jurisdiction in respect of each employee to realistically assess and manage the financial risks the business is exposed to in respect of its employees based abroad.

The starting point is usually that irrespective of what the employment contract says, an employee is protected by the employment laws of the country in which he or she is based and it is only the courts of that country which have jurisdiction to hear the claim. However, the Employment Rights Act 1996 (ERA) is in fact silent when it comes to territorial scope. Originally, s.196 excluded employees who ordinarily worked outside of Great Britain from the right to claim unfair dismissal and other protections contained in the ERA. This was repealed by the Employment Relations Act 1999 and has not been replaced. The common law therefore now applies. Likewise, the Equality Act 2010 (EqA) does not limit protection to employees who are based in Great Britain.

In the case of The British Counsel v Jeffery, Mr Jeffery was a British national recruited in Britain to work for the British Council in Bangladesh. Mr Jeffery resigned and brought claims in the Employment Tribunal (‘ET’) under the Employment Rights Act 1996 and the Equality Act 2010. The claims were initially rejected by the ET on the basis that Mr Jeffery was an expatriate worker and that accordingly it did not have jurisdiction to hear his claims. Mr Jeffery appealed to the Employment Appeal Tribunal (EAT), which overturned the ET’s ruling and held that Mr Jeffery, because he had a strong connection with Great Britain, should be able to pursue his claims in the ET in Great Britain even though he was working abroad. The Court of Appeal upheld the EAT’s judgment.

The Jeffery case, together with previous case law, show that when deciding if an employee should be entitled to bring a claim in Great Britain, the courts will consider whether the employee has a sufficiently strong connection with Great Britain and British employment law. In doing so, the courts will take into account factors such as:

Whether the employee has a home in Britain;
The applicable law referred to in the employment contract;
HR/employment relationship being managed from Britain;
Where the employee was recruited;
Where the work is done;
Where the employee is usually based;
What was said to the employee on the law which will apply;
The currency and place of payment; and
The tax position of the employee – where does he or she pay tax.

In light of recent case law, businesses should remember that employees based abroad can still bring employment protection claims in the ET if they can show a sufficiently strong connection with Great Britain. The question of ‘sufficiently strong connection’ will be assessed on a case by case basis and for this reason we recommend HR Managers carry out an initial analysis of applicable law and jurisdiction of employees based abroad as this should give the business an indication of the level of financial risk it is exposed to in respect of those employees.

There are some steps businesses can take to minimise an employee’s connection with Great Britain which include making salary payments in local currency and deducting tax locally; have employees report to a local managers and local HR instead if back to Great Britain where possible; employ the employees in the foreign company and not in the UK company; provide the employee with a local employment contract which is subject to local laws; recruit the employee in the location in which he or she is to be based if possible (as opposed to recruiting from the UK and sending the employee abroad).

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.