Foreign employees cannot rely on UK employment rights

Foreign employees of British businesses will not be able bring unfair dismissal cases in the UK, after a ruling by appeal judges last week which overturned a controversial ruling by the Employment Appeal Tribunal (EAT).

In the case of Serco v Stephen Lawson and the Foreign Commonwealth Office, Mr Lawson was employed by Serco, a UK-registered company, as a security guard based on Ascension Island in the South Atlantic. He claimed that he had been constructively unfairly dismissed. The employment tribunal hearing his case decided that it did not have jurisdiction and, then, Mr Lawson successfully appealed to the EAT. Last week the Court of Appeal dismissed that appeal and rejected, in the words of Lord Justice Pill, “the startling proposition” that the Employment Rights Act 1996 conferred the right not to be dismissed on employees everywhere.

According to Jonathan Cohen, a barrister at Cloisters Chambers, the ruling of the EAT was “something of a surprise in a policy sense” as it seemed to significantly widen the prospects of employees bringing claims. “However the Court of Appeal decision is intellectually surprising in the sense that, whilst it may achieve the objective they were looking for or what Parliament might have intended, it just doesn’t stack up on the law,” he said. A colleague of Cohen’s at Cloister’s, Jacques Algazy, is representing the respondent.

There had been a jurisdictional test formerly in section 196 of the 1996 Act which provided that legislation did not apply to employment “where under the employee’s contract of employment he ordinarily works outside Great Britain”. According to the Court of Appeal, this was repealed partly to meet the requirements of the Posting of Workers Directive (96/71/EC).

According to Jonathan Cohen “a void was created” by the repeal of the section. “The Court of Appeal has said that when the ERA talked about employment, it must have meant employment in Great Britain,” he says. “Now if that’s right section 196 was never necessary in the first place.” He argued that the Appeal judges “implied those words into statute”. “They realise that Parliament has made a mistake and they are trying to correct the situation as best they can and not open the floodgates to claims from US employees living in America who perhaps worked in a British company,” he said. But it was not for the court “to step in and try and do the work for Parliament,” he added.

The barrister argued that another “difficulty” with the judgment was that there was now no guidance as to what constitutes employment in Great Britain. “Will it be somebody who spends half their time working here? Or somebody who signs their employment contract here but then works abroad?” he asked.

Lord Justice Pill said that “borderline cases” would depend on “an assessment of all the circumstances of the employment in the particular case”. He said: “The residence of the parties may be relevant to where the employment is, but the emphasis must be upon the employment itself. That … is the ‘legislative grasp’ of the 1996 Act.”