And here is the news from abroad…
Are you liable if you dismiss an employee working abroad?
Once again the Courts have gently moved the goalposts that determine whether someone working abroad can bring an unfair dismissal or discrimination claim in the UK Employment Tribunals. Is the recent Olsen v. Gearbulk case below the final position (or just the latest nudge)? Or will there be more nudging to come? The last word probably hasn’t yet been written.
I advise quite a few UK organisations that have an international brand and a global reach. This doesn’t mean that they export products to the rest of the world. It means that their staff work abroad in different parts of the world, usually on UK contracts, but only rarely come to the UK, even though the UK is perceived by them (and the colleagues they work with abroad) as “home”.
Several of these organisations are charities or NGOs; the others are banks, insurers, law firms and other large commercial organisations. Superficially they don’t have much in common. But what they do have in common is that they never know if they’re at risk of having a UK claim brought against them after terminating the employment of an employee working abroad; nor is there a definite answer to that dilemma.
These were the main facts of the Olsen v. Gearbulk case: Mr Olsen was Danish; he lived in Switzerland; he was an employee of a Bermudian company; he had been offered, but rejected a UK law contract that would have based him in the UK; instead he had a contract governed by Bermudian law to work in Switzerland; he managed about 100 employees internationally including up to 20 in the UK; he spent more time in the UK than in any other international office and was paid in Sterling; but he structured his time so that he worked for fewer than 90 days in the UK and so wasn’t resident for UK income tax. Despite this, when he was dismissed (he said following a whistleblowing disclosure) he brought an unfair dismissal claim in the UK. But the ET and the EAT held that there was an insufficiently strong connection with the UK and so his claim was rejected.
“That’s a no-brainer” you might be thinking. However no one set of circumstances is identical to the next. So no one decision will necessarily be simpler or more difficult than the next. Consequently employers need better guidance, even though there has been a string of cases that have developed different tests to decide whether a UK ET has jurisdiction to deal with dismissals or discrimination occurring abroad. This blog is no place to analyse those cases in detail. But here is a possible approach for starters:
– the Lawson v. Serco tests: does the employee ordinarily work in GB? Does a peripatetic employee ordinarily work / get paid in / pay tax in GB? Can the employee’s work abroad be regarded as being in a British enclave (shades of Rupert Brooke’s “corner of a foreign field”); is there an equally strong connection with GB and with British employment law? (2006)
– the Duncombe test: does the employment have much stronger connections with GB and with British employment law than any other system of law? (2011)
– the Ravat test: does the employment relationship have a stronger connection with GB than with a foreign country where the employee works and is there a sufficiently strong connection with the UK that Parliament would have regarded it as appropriate to hear the claim? (2012)
– the van Winkelhof test: is it possible to identify factors that are sufficiently powerful to displace the territorial pull of the place or work abroad? (2012)
All of the above tests are, admittedly, a bit vague. That said, they have a pragmatic “you’ll know an elephant when you see one” approach that most employers will be capable of applying. So if the answer to any of the “abroad” tests outlined above is “yes” you should be assuming that there is a risk of a UK ET claim and head in the direction of a Settlement Agreement.
In passing, it’s also wise to ask another question: are any “in-country” employment rights triggered abroad in the location where a terminated employee has been working? If you get that wrong, an employer can end up paying substantial damages, because far more countries than you might imagine have highly developed employment law rights with compensation entitlements. Don’t successfully avoid or minimise UK liability but end up being liable abroad.