United Kingdom: Working Abroad: Who has the Right to Claim Unfair Dismissal?

Last Updated: 14 February 2006
Article by Christopher Booth

The right to claim unfair dismissal is contained in the Employment Rights Act 1996. Surprisingly, following amendments made in 1999, the Act contains no geographical limit. Read literally it therefore applies to any employee who works under a contract of employment anywhere in the world. Clearly this cannot have been Parliament's intention and it has therefore fallen to the courts to decided whether employees who work abroad can bring unfair dismissal claims. They have not found this an easy task as the recent decision of the House of Lords in Lawson v Serco illustrates.

Employment in Great Britain

Prior to the House of Lords decision, the courts had established that unfair dismissal rights could only arise if there was ‘employment in Great Britain’. Unfortunately, the House of Lords watered down this approach, pointing out that those words do not appear in the statute. In their view, employment in Great Britain should be viewed as a guiding principle rather than a definitive test (whatever that means).

Their Lordships then went on to consider two categories of employees: peripatetic employees whose work takes them all over the world, and expatriate employees who are based in a single foreign location. In the case of peripatetic employees, it held that there was much ‘common sense’ in treating their base as their place of employment. As a result, airline pilots employed by a foreign airline but who were based in London could bring unfair dismissal claims.

Expatriate employees posed rather more problems. The House of Lords held that exceptionally someone working and based abroad could claim unfair dismissal. However, the fact that the employer was based in Great Britain and the employee was British and recruited in the UK was not sufficient to bring him within the exception. Further UK ties were necessary. Their Lordships gave two examples where these additional factors would be present:

  • the employee is operating in what is effectively a British enclave abroad (such as a military base); or
  • the employee is posted abroad by a British employer for the purposes of a business conducted in Great Britain, as opposed to simply working for an overseas branch of a British business (an opaque distinction which is bound to lead to further litigation).

Practical Implications

It is disappointing that this case lacks the clarity employers were hoping for. However, one point is clear. The focus of enquiry is on how the contract was being operated at the time of dismissal rather than the terms of the original contract. This is something to bear in mind when employers are considering their exposure to potential claims.

Vicarious Liability and Temporary Workers

It is well established that an employer can be held liable for an act of negligence committed by an employee in the course of his employment (a concept known as ‘vicarious liability’). In most cases the identity of the employer is obvious, but what happens when one party provides a worker to another on a temporary basis - as happens where staff are seconded to another organisation or supplied by an agency to an end user? Can the temporary employer in such cases be held liable for the negligent actions of the employee?

The Hawley case

According to the Court of Appeal in Hawley v Luminar Leisure Ltd, the answer is yes. In that case a nightclub doorman had been supplied to Luminar by ASE, a company to whom Luminar had subcontracted its security services. Whilst working for Luminar, the doorman seriously assaulted a member of the public who subsequently sued Luminar and ASE on the basis they were both vicariously liable for the doorman's negligence. The Court of Appeal found that whilst ASE employed and paid the doorman and was ultimately responsible for dismissal, it was Luminar which exercised practical control over his activities at the nightclub. The doorman was therefore deemed to be a temporary employee of Luminar for the purpose of vicarious liability and, on the particular facts, Luminar was held to be 100 per cent liable for the damage he caused.

Practical Implications

This case was only concerned with vicarious liability and does not mean that Luminar would necessarily have been regarded as the employer for the purposes of unfair dismissal (although recent case law shows that there is now a real risk that temporary workers will acquire unfair dismissal rights against end users, particularly where they have been employed by the end user for a year or more). However it does mean that, even with short term placements, employers should consider taking out insurance and/or obtaining indemnities from suppliers to cover any loss suffered by the end user as a result of the employee's negligence.

Do You Need To Know…?

DTI publishes legislative timetable for 2006

The DTI has published its Annual Statement of Commencement Dates which sets out its legislative programme for 2006. The aim of the statement is to provide businesses with greater awareness so they can plan for new measures and thereby reduce costs. To this end the DTI tries to have just two dates - 6 April and 1 October - when most changes to the law will take effect (although increases to the limits on tribunal awards still take place on 1 February each year). As far as employment matters are concerned the statement confirms that the new TUPE regulations will come into force on 6 April 2006. Changes taking place in October 2006 include the introduction of age discrimination legislation, the annual increase to the National Minimum Wage and the implementation of parts of the Work and Families legislation currently going through Parliament. For further information see http://www.dti.gov.uk/ewt/common_comence.pdf

Information Commissioner gives guidance on references

The Information Commissioner has recently published a two page Good Practice Note on the application of the Data Protection Act 1998 to employment references. In particular, it addresses the thorny problem of whether an employer who has received a confidential reference is obliged to provide a copy if the person who is the subject of the reference asks for one. In a section entitled ‘Recommended Good Practice’ the guidance takes employers through the relevant considerations, concluding that in most cases employers should provide the reference or at least a substantial part of it. For further information see http://www.ico.gov.uk/cms/DocumentUploads/Subject_access_and_employment_references.pdf

TUPE Regulations: Expert Advice from Pinsent Masons

The long awaited TUPE Regulations have been laid before Parliament and are expected to be published on 15 February. They will become law on 6 April 2006. The DTI has published a guidance document on the new rules which is available at http://www.dti.gov.uk/er/individual/tupeguide2006regs.pdf.

 

Cases referred to in this update:

Lawson v Serco [2006] UKHL 3; Hawley v Luminar Leisure Ltd [2006] EWCA Civ 18.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Christopher Booth
 
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