UK employees abroad risk loss of unfair dismissal rights

Employees who are sent to work overseas for extended periods will risk losing statutory unfair dismissal rights in the UK following a decision by three senior judges yesterday.

Attempting to clarify a grey area of law, the Court of Appeal said rights contained in the 1996 Employment Rights Act were designed to cover "employment in Great Britain".

The three-judge panel said: "In most cases it will not be difficult to decide whether the employment is in Great Britain; borderline cases will depend on an assessment of all the circumstances of the employment in the particular case."

"The residence of the parties may be relevant … but the emphasis must be upon the employment itself."

They added, however, that "a dismissal during a single, short absence from Great Britain … would not normally exclude the protection of the 1996 Act".

The unfair dismissal rights of expat workers has been a very confused area of employment law, particularly since a section of the Employment Rights Act was repealed about three years ago without replacement.

A handful of test cases have made their way to the Employment Appeal Tribunal, including one involving a former sales executive posted to San Francisco for the Financial Times.

In recent decisions, judges have suggested that employees working overseas should be able to pursue unfair dismissal claims in Britain if their employment had a "substantial connection" with the UK - a much looser approach than the Court of Appeal's and one which the higher court said yesterday it did not accept.

Lawyers said afterwards that the decision had shifted the position of expat workers quite significantly, but it would still take further cases to establish the parameters for "employment in Great Britain".

Rob McCreath, partner at Eversheds, agreed that the Court of Appeal decision "does take the debate back to first principles - but there is still the question, what does 'employment in Great Britain' mean?"

The appeal court made its ruling in the case of a British man employed by Serco, a Middlesex-based company. Although interviewed in Britain and paid in sterling in the UK, his work was on Ascension Island. The EAT opened the way for him to bring an unfair dismissal complaint but yesterday, in line with its broader comments, the Court of Appeal allowed Serco's appeal.

The claimant could still petition the Law Lords to hear the case directly.

Financial Times: January 2004