Scope of English employment law in the context of international companies, 22 April 2013

Scope of English employment law in the context of international companies, 22 April 2013

Dhunna v Creditsights Ltd.             April 2013

The decision of an employment tribunal was challenged when it decided it did not have the jurisdiction to hear a case of unfair dismissal. The appeal looks at the difficult task of determining the scope English employment law.

Background:

Mr Dhunna was employed by Creditsights Ltd, (“Ltd”) which was based in London with a parent company based in New York. He initially worked in London, but was keen to have a role solely with the Middle East and Africa, and moved to Dubai when an office was opened there.

There was some confusion over the nature of this office, and whether Mr Dhunna was a representative of the business carried on in London, or in fact part of an international business headed by the New York office. (For example, all the sales and invoices handled from London. On the other hand his line manager’s office was a subsidiary of New York, and the decision to dismiss Mr Dhunna was taken there.)

The tribunal had to decide whether someone who is an employee of a UK company who works and lives abroad falls within the scope of English employment law. At time of the tribunal the most recent authority (“Serco”) gave the general rule that the place of employment is decisive, and a connection to the UK must be particularly strong and “the circumstances would have to be unusual” to overcome this.

Certain exceptions to the general rule were provided and the tribunal held that Mr Dhunna failed to fall into these categories. It decided that the Dubai office was not a representative office and that Mr Dhunna was essentially part of the Asian side of a global operation. It concluded there was not a sufficient connection to the UK and so the tribunal did not have jurisdiction over the matter.

Appeal:

It was held that the approach which the tribunal followed has been replaced with subsequent authorities. The method of determining the jurisdiction of the law is to ask whether the claimant’s employment has stronger connections with British employment law than with any other system of law. The examples given in the Serco case are simply that: it is the general principle that is of importance and should be applied. So, there must be an unusually and especially strong connection with English law here, but the comparison is with the jurisdiction in which the employee works.

Mr Dhunna’s appeal rested on the basis that his contract was governed by English law and he had no particular connection to Dubai. It was held that while many of the facts support the conclusion that Mr Dhunna was not within the scope of English law, the question of the relative strength of connection to English law and that of Dubai was not sufficiently addressed by the original tribunal.

The appeal was allowed and the complaint remitted to a different Employment Judge to determine whether a tribunal has territorial jurisdiction to hear the Claimant’s claims of unfair dismissal.

Remarks:

International companies should take note of the complexities of employment law jurisdiction and bear in mind that the principles to be applied are: the general rule is that the place of employment is decisive, but where the employment has much stronger connections with the UK and UK employment law than any other system, the employee may be able to claim for unfair dismissal and other rights under UK law.

The country the employee lives in is relevant, and where they live and/or work in the UK the comparison of connections is not required. Note that ties with a third country may diminish the connection with the UK, and render it insufficient to be covered by UK law.

The particular interest here is the speed with which the law can change. While the decisions of tribunals are entitled to ‘considerable respect’ and reasonable judgements will not be interfered with, approaches to the application of the law do evolve. It is necessary to keep up with the latest developments in case law, as this case demonstrates a substantial change in arguments between the original tribunal and the appeal.