UK: The Territorial Scope Of Unfair Dismissal And Whistleblowing Rights

Last Updated: 30 March 2015
Article by Nick Dent

With increasing numbers of employees working in overseas offices, or even working abroad remotely for employers based in Great Britain, the issue of whether overseas employees can access UK employment rights is becoming more and more significant. To bring an unfair dismissal claim against their employer, an employee will need to demonstrate a "sufficiently strong" connection to Great Britain to make it appropriate for a UK employment tribunal to hear their claim.

A number of recent cases have shed further light on this test. The courts will decide if this connection exists by carefully considering all of the features surrounding the individual's employment, particularly whether the employee's work serves the overseas or domestic part of the business. It has recently been confirmed that overseas employees seeking to bring whistleblowing claims must similarly establish that they have a "sufficiently strong" connection to Great Britain.

Recent important decisions

Three cases have recently confirmed and expanded on the "sufficiently strong" connection test. It is now clear that there is no single factor which will dictate whether an overseas-based employee has the requisite connection to Great Britain. In Creditsights Ltd. v Dhunna (2014), a British national working in Dubai for a British subsidiary of a US company was dismissed for alleged gross misconduct. He attempted to bring an unfair dismissal claim in Great Britain. The Court of Appeal confirmed that establishing whether he had a sufficiently strong connection to Great Britain involved a careful consideration of all the facts surrounding his employment. The technical set up of the overseas business, the location of the employee's clients and the way the employee was being paid were identified as pertinent to the extent of the employee's "connection".

This approach can have results which some employers may consider surprising: the courts have held that an employee living and working in Australia had a close enough connection to Great Britain to bring a claim against her employer. In Lodge v Dignity & Choice in Dying & Anor (2014), Mrs Lodge, an Australian citizen, worked as Head of Finance for a British charity under an employment contract governed by English law. Initially based in their London offices, in December 2008 she returned to Australia for personal reasons but kept her job, working remotely via a virtual private network. In June 2013 Mrs Lodge resigned and brought constructive unfair dismissal and whistleblowing claims in England. The Employment Appeal Tribunal (EAT) concluded, having considered all of the features of her employment arrangement, that although she worked in Australia, all of her work was done for the benefit of her employer in London. The EAT said it was immaterial that she was a "virtual employee", not a "physical employee". Mrs Lodge was therefore allowed to bring her claim.

It has recently been made clear that the "sufficiently close connection" test will also apply to overseas employees attempting to bring whistleblowing claims. The case of Smania v Standard Chartered Bank (2014) concerned an Italian living and working in Singapore. His only connection to Great Britain was that his employer's head office was in London. He was dismissed, having made allegations of financial malpractice against his employer, and sought to bring a whistleblowing claim. The EAT found that it was equally important to establish a sufficiently strong connection to Great Britain in claims for whistleblowing as in unfair dismissal claims. It concluded that an employment tribunal here did not have jurisdiction in relation to a whistleblowing claim brought by an Italian

banker living and working in Singapore, because there was not a sufficient connection to the UK, and there was no basis for applying a looser test in whistleblowing cases.

What this means for employers

As more and more businesses adopt flexible and remote working, and with technological advancements allowing more employees to work in overseas offices, employers should keep in mind that such employees may still have recourse to employment rights before an employment tribunal in Great Britain. As Lodge has demonstrated, this is the case irrespective of whether the employee is sent abroad by their employer or chooses to go themselves.

It may seem counter-intuitive that in the case of Lodge, an employee who is physically so very far removed from the UK can bring UK proceedings. However, the decision very much turned on its own facts, focusing on the fact that there was no Australian business and the employee was wholly and exclusively working for the UK business. If there had been an Australian group company to which the employee had been contracted and had supplied even some services, the result in all likelihood would not have been the same, even if they had primarily still been servicing the UK business. This highlights how very fact-sensitive a question it is whether there is a sufficiently close connection to Great Britain. The courts will decide whether an employee can bring a claim on a case-by-case basis, carefully considering all of the facts surrounding the employment set-up.

Employers should therefore think carefully about the arrangements that they have in place for employees working abroad, giving particular consideration to the part of the business an employee is working for. A key consideration is whether the employee works for the benefit of a part of the business based in Great Britain or abroad. It doubtless does not make sense to let the employment jurisdictional issues dictate the working patterns that are adopted – that would be to let the tail wag the dog – but it is important to be conscious of the potential for employees to claim UK jurisdiction in these circumstances and there may be ways of contracting with expats/remote workers which improve the employer's position. As the Smania decision confirms, there is a point at which the UK tribunals will draw the line and refuse to assume jurisdiction.

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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