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14 August 2017

65: Employment Appeal Tribunal considers statutory employment rights of UK expats

Since the Employment Rights Act 1996 is silent as to its territorial scope, it has been left to the courts to provide guidance on whether employees working overseas have statutory employment rights in the UK.

In Green v SIG Trading Limited, the Employment Appeal Tribunal (EAT) considered whether a British citizen who was employed by a British company to work in Saudi Arabia could bring an unfair dismissal claim.

Mr Green is married to a Lebanese national, has lived in the Middle East for over 15 years, and has no home in the UK. He was recruited by SIG, a UK registered company, to work as the Managing Director of its business in Saudi Arabia. Mr Green continued to live in Lebanon and commuted to Saudi Arabia for two to four days each week. He reported to a manager based in the UK, and other staff and support services were located in the UK. Although he was paid in sterling, he was exempt from UK tax and national insurance. Mr Green was given SIG’s standard UK contract which was stated to be governed by English law and referred to UK employment legislation.

Due to poor financial performance, SIG decided to close its business in Saudi Arabia, and Mr Green was made redundant. An Employment Tribunal ruled that it did not have jurisdiction to hear Mr Green’s claim of unfair dismissal because there was not a sufficiently strong connection between his employment and the UK. The Tribunal accepted SIG’s evidence that it had used its standard-form UK contract only for convenience and that in reality he was an expatriate employee with stronger connections to Saudi Arabia and the Middle East. The Tribunal also held that the fact that his dismissal was handled by the UK business was done simply for pragmatic reasons.

However, the EAT upheld Mr Green’s appeal. It ruled that the Tribunal had been wrong to automatically accept SIG’s explanations, such as using their standard UK contract ‘for convenience’. The assessment of whether Mr Green’s employment had a stronger connection with the UK or Saudi Arabia had to be viewed objectively, taking into account all relevant circumstances. The Tribunal should not therefore have ignored the fact that his contract stated that it was governed by English law and referred to UK employment law. The case was remitted to the Employment Tribunal for reconsideration.

This case highlights the risks for employers in using standard UK employment contracts for employees working overseas. It is vital that contracts are tailored to the individual circumstances of each employee. In particular, careful thought should be given to the choice of law which will govern the contract of employment since this will be relevant to determining contractual disputes and the extent to which the employee has UK statutory employment protections, such as the right to claim unfair dismissal and discrimination.

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