When does UK employment law apply to overseas workers? - An employers' guide
Thursday, February 7, 2013
Despite recent attempts by the UK Government to shift the balance back in favour of the employer, the UK still boasts one of the most extensive systems of employment law, in terms of the protection it gives employees. An employer's obligations under the UK employment law regime are often more rigorous than those of foreign countries, certainly when compared to those beyond the European Union.
This protection can extend not just to employees working within the UK but also to those working abroad, depending on the individual circumstances of the employment relationship. This issue was highlighted recently in a well-publicised case involving Halliburton, which decided that an 'international commuter' was covered by UK employment law. The Supreme Court decided that a Halliburton employee who worked in Libya on a '28 day on, 28 day off' basis was entitled to claim unfair dismissal because of a "sufficiently strong connection with Great Britain". This principle has been reinforced by a number of subsequent cases.
Awareness of this area is crucial to UK-based employers in the oil and gas sector who frequently employ or engage people to work outside of the UK. Even where your business and employees are based abroad, if the employment relationship has a "sufficiently strong connection" with the UK, the individuals concerned could be covered by UK employment law.
If you manage employees remotely it may be more difficult to ensure compliance with your obligations under UK law, potentially exposing your business to the risk of multiple claims relating to the various stands of discrimination as well as unfair dismissal. This means that some employers may wish to consider taking steps to minimise the chance of UK employment law applying to employees working abroad. Equally, some may want to be sure that UK law does apply.
In Ravat v. Halliburton Manufacturing and Services Limited, the Supreme Court decided that Mr Ravat could bring his claim for unfair dismissal in the UK because his employment had a stronger connection with the UK than Libya, where he worked. Mr Ravat was employed as an accounts manager and commuted between his home in Preston and his job in Libya. His commuting costs were covered by his employer; his salary, tax and National Insurance contributions were paid in the UK; his contract stated it was governed by English law and his grievance had been dealt with by Halliburton's Aberdeen office. These factors were found to outweigh the fact that Mr Ravat always worked in Libya, reported to a manager in Cairo and did much of his work for the German branch of Halliburton.
In a subsequent case involving a UK law firm, Clyde & Co LLP, the Court of Appeal decided that where an individual spent some time living or working in the UK (even a few weeks), that would be enough to show a sufficient connection to the UK. It was not necessary to take into consideration the factors pointing away from the UK, even where there were many, as in this case.
The High Court has recently also allowed a claim by a group of pilots working for a company providing private jet hire across Europe, Netjets Management Limited. The claim to be recognised as a bargaining unit for collective bargaining purposes was successful because the pilots were able to show a sufficiently strong connection to the UK. The court was particularly influenced by the fact that the pilots' contractual terms relating to pay, hours and holidays were governed by English law.
Whether an employee is protected by UK employment law will always depend on the individual circumstances of their employment. It is, however, possible to identify the following checklist of factors which will influence whether UK law applies:
- The location of the employing company;
- Where management, HR functions, training and administration relating to the employee's work take place;
- Where pay, pensions, tax and National Insurance contributions are payable;
- The currency in which employees are paid;
- Whether the employer pays commuting or other related costs;
- The amount of time an employee spends in the UK to work, live or to undergo training;
- Whether legal references in the contract are consistent with the legal system said to be applicable; and
- Whether there is a clause in the contract dealing with where the parties anticipate legal claims should be raised;
While all these factors will be taken into account, they are not decisive and it is worth noting that the courts will look at the reality of the employment relationship in order to determine whether the connection with the UK is sufficiently strong to merit the protection of UK law. Employers who are thinking of implementing the measures necessary to exclude the applicability of UK law may want to weigh up the cost of this against the risk of potential claims that employees may be able to bring in the UK and any adverse employee relations issues which may arise.
Contribution by Eric Gilligan and Claire Scott
from Brodies LLP
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