Can an Employee Working Abroad on a Rotational Basis Bring an
Unfair Dismissal Claim?
February 9, 2012
"Yes", says the Supreme Court in a unanimous decision handed
down on 8 February 2012 in Ravat v. Halliburton Manufacturing
and Services Limited.
The judgment confirms the majority decision of the Court of
Session (the Scottish equivalent of the Court of Appeal) that an
employee who lived in Great Britain but worked in Libya on a “one
month on, one month off” rotational basis qualified for unfair
dismissal protection under the Employment Rights Act 1996 (the
ERA). The majority had adopted different approaches to the
guidelines on the territorial scope of the ERA set out in Lawson v.
Serco. The Supreme Court’s judgment therefore brings welcome
clarity to the question of the territorial jurisdiction of the
ERA.
Background
The ERA does not contain any limits on its geographical
application, so there has been confusion about the correct test for
establishing its territorial scope. In 2006, the House of Lords in
Lawson identified three categories of employee who could
qualify for unfair dismissal protection under the ERA:
- Standard cases, where the employee lives and works in Great
Britain.
- Peripatetic employees, who work in different jurisdictions but
have their base in Great Britain (e.g. airline pilots and
travelling sales staff).
- Expatriate employees, who are, for example, those posted abroad
to further the business of a British employer (e.g. a foreign
correspondent of a British newspaper).
An employment tribunal found that it had jurisdiction to hear Mr
Ravat’s unfair dismissal claim, as, although he did not fall within
any of the three categories identified in Lawson, there
was a "sufficiently substantial connection" between the employment
relationship and Great Britain. However, that decision was set
aside by the Employment Appeal Tribunal, when it held that the
tribunal had adopted the wrong test. It found that Mr Ravat was an
"expatriate employee", but that he did not qualify for unfair
dismissal protection because his work did not further the business
of a British employer. Mr Ravat successfully appealed to the Court
of Session.
Facts
Mr Ravat, a British citizen living in Lancashire, was employed
by Halliburton for 16 years until his redundancy in 2006. From
March 2003, he worked in Libya for a German subsidiary of
Halliburton’s parent company. At this time, he worked a rotation of
28 consecutive days in Libya, followed by 28 consecutive days at
home. While at home he carried out a small amount of work for
Halliburton. This rotational work pattern was under Halliburton’s
"international commuter assignment policy", which differed from the
company’s arrangements for expatriates who worked and lived abroad.
Mr Ravat’s employment contract was subject to UK law and
Halliburton assured him that he would continue to have the full
protection of UK law while working abroad. He was kept on the UK
pay and pensions structure that Halliburton applied to other
UK-based employees and was paid in sterling after the deduction of
UK income tax and national insurance contributions. All the
contractual aspects of his employment, including payroll and
grievance procedures, and the redundancy process when his
employment ended, were dealt with from Halliburton’s headquarters
in Aberdeen.
Decision
The Supreme Court dismissed Halliburton’s appeal and confirmed
that Mr Ravat did have the right to claim unfair dismissal. The
case will be sent back to the Employment Tribunal to deal with the
merits of his claim.
The Court confirmed that the three categories set out in
Lawson v. Serco are not exhaustive and the correct test is
whether the connection between Great Britain and the employment
relationship is sufficiently strong to enable it to be presumed
that, although the employee was working abroad, Parliament must
have intended that the ERA should apply to them. The
Court also said that it will always be a question of fact and
degree whether the connection is strong enough to overcome the
general rule that the place of employment is decisive.
For Mr Ravat, the factors the Court considered significant were
that:
- Halliburton’s business was based in Great Britain;
- Halliburton chose to treat Mr Ravat as a "commuter";
- Mr Ravat received the same benefits that he would have received
had he been working in Great Britain and paid UK income tax and
national insurance contributions;
- Halliburton assured Mr Ravat that UK employment law would
continue to apply to him and the employment relationship was
conducted as if UK employment law applied; and
- Mr Ravat’s home was in Great Britain.
Impact for Employers
Employers should not assume that employees working abroad are
not covered by British employment law. Factors such as those listed
above may influence the outcome, but it is a question of degree and
each case will depend on its own specific circumstances. Employers
who wish to weaken the connection between the employment and Great
Britain to minimise the risk that an overseas employee can raise
claims in an employment tribunal should consider taking measures to
show the employment relationship is not governed by UK law. This
could include: engaging employees via offshore companies; paying
employees in a local currency rather than sterling and subjecting
them to local tax laws; excluding employees from UK reporting
lines; and expressly labelling them as “expatriate” employees.
However, even such measures may not defeat claims by employees in
circumstances similar to Mr Ravat, where there are strong grounds
for arguing that he should not be denied rights under British
employment law.