The EAT Considers Territorial Jurisdiction for an Overseas Employee Working Under a Contract Governed by UK law!
As everyone knows employees have the right not to be unfairly dismissed by their employer under the Employment Rights Acts (ERA 1996). However, the ERA 1996 is silent on this right’s territorial scope, so it has been left to the courts to determine the issue.
Historically the provision has only applied to employees working abroad in exceptional circumstances. For example, ‘expatriate employees’ who are employed by a British employer but who live and work entirely abroad. The key question is whether an employee’s connection with Great Britain is sufficiently strong that it is appropriate for an ET to deal with the claim.
In the recent case of Green v Sig Trading Limited, the EAT considered whether the ET had considered all relevant factors for determining whether Mr Green as an employee of a UK registered company who had worked only in Saudi Arabia could bring a claim for unfair dismissal. Mr Green's employment contract expressly stated that it was subject to English employment law. It was accepted by both parties that this contractual term on governing law was binding. The ET though dismissed Mr Green’s claim on the basis that it did not have jurisdiction to hear the claim. The ET held that the employer had only used the UK contract as a matter of ‘convenience’ and was therefore not a relevant factor.
The case was appealed to the EAT. Amongst other arguments, Mr Green held the ET had wrongly evaluated the factors pointing to his connection with Great Britain by regarding what it found to be the employer’s subjective intention.
In allowing the appeal, the EAT held that the comparative assessment of whether Mr Green's employment had a stronger connection with British employment law or Saudi Arabia must be viewed objectively. The fact that the employment contract was stated to be subject to English law was not a factor that could be discounted simply because the employer had used its standardised form of UK contract as a matter of ‘convenience’. The ET had therefore wrongly disregarded this relevant factor as it had considered the employer’s subjective explanation rather than applying an objective test. The case was remitted to the ET for reconsideration.
The case is an important warning for employers, as it highlights the dangers for UK businesses in using standardised contracts for overseas employees!
This bulletin is for general guidance purposes only and should not be used for any other purpose.
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