The Mauritius financial sector has been blooming over the years and, as a result of same, we have had numerous calls to bring on more substance to Global Business Companies set up in Mauritius.
One of the ways to show added substance has been through the employment of personnel who either work in Mauritius or in foreign jurisdictions and having their contract of employment governed by Mauritian law.
In the case of an employee working outside Mauritius, but under a contract of employment with a Mauritian entity, the issue would be to ascertain the applicable or governing law of the contract of employment. In other words, would the person's employment be governed by the law of the country where the employee is effectively working or by Mauritian employment law?
The importance of the above issue may be summarised through the following examples:
a) In the event of dismissal of the employee, it might prove advantageous for the employee to claim severance allowance in the country where he is performing work as opposed to the computation of severance allowance under Mauritian laws. This may entail increased liability for the employer.
b) Same would apply to disciplinary proceedings. Under Mauritian laws, misconduct is a ground for the dismissal of an employee and the definition of the said term is found in the Employment Rights Act. However, a situation may arise where an act of misconduct may qualify under the Mauritian Employment Rights Act but not under the employment legislation of the country where the employee is working. This would, again, entail greater liability for the employer should the latter elect to dismiss such employee.
c) Another example would be the general conditions of employment. This may include various terms of employment from the maximum number of working hours to the number of leaves granted or to retirement gratuity.
The above would be important elements which the Mauritian employer needs to foresee in order to mitigate any potential legal liability from an employee's claims.
It should be noted that there are no recent judicial decision in Mauritius with regards to that issue. The last case which dealt with this issue would appear to be Permanent Secretary Ministry of Labour v Rogers and Co ltd 1965 MR 37. The issue in that case was whether the contract of employment of an employee working for Rogers (a Mauritian entity) in Diego Garcia (which was considered as a lesser dependency and where the Mauritian labour laws did not de facto apply)was to be governed by the then applicable labour ordinance in Mauritius.
The approach taken by the Court in the Rogers case was that, in the absence of any laws or regulations in relation to contracts of employment, the object of which is meant to be carried out outside of Mauritius, we need to rely on the general principles of private international law as regards to conflict of laws.
In an attempt to determine what would be the applicable law in the above circumstances, a review of the authorities on private international law have shown that there are three main principles that would apply:
a) The first principle, as regards to the applicable law, would be the choice of the parties as expressly provided in the contract of employment. If both parties, that is the employer and the employee, have expressly provided that any relocation, secondment or performance of any services outside Mauritius shall be subject to and governed by Mauritian laws, then the intention of the parties shall prevail. Both parties shall then have all rights and obligations as provided by the Mauritian employment laws in the same manner as if the contract was being performed in Mauritius.
b) The second principle is, in the event where the contract of employment contains only the standard clause as regards to the applicable/governing law (that is simply stating that the contract shall be governed by Mauritian law) or where there is no "governing law" clause at all, the proper law of the contract may then be presumed to be the law of the country where the performance of the contract is to take place. "Great weight will thus be given to the law of the place of performance as being the proper law of the contract, especially where the contract is made in one country but to be wholly performed in another. The presumption is here very much stronger because the contract is almost certain to be far more closely connected with the place of performance than with the place of contracting".
c) Last but not least, we should bear in mind that the ultimate goal of employment law is to protect the employee since it is generally accepted that the employee does not sit at arm's length with the employer. Therefore, when applying a rule of interpretation, the judge may decide that the applicable law shall be the law which would afford more protection to the employee.
On the other hand, an employer should not wait for a problem to arise to decide on the applicable law. We would therefore advise employers to implement at a minimum the following practical points in order to limit their liability on this issue:
- When an employee is due to leave Mauritius, the parties should already agree on the applicable law by way of a secondment or relocation agreement;
- The employer may provide for the temporary suspension of the original contract of employment or consider validly terminating the first contract of employment prior to the secondment or relocation;
- Provide that, in the event of termination, the employee shall waive any potential claims that the employee may have in other jurisdictions.
Our analysis of the above brings us to the conclusion that there is no hard and fast rule to this issue and cases will generally be decided on the merits of each and every case. It would be in the interest of all parties to take note of the guidance set out in this article to avoid any uncertainties or disputes which may arise.
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.