An appeal ruling has made it clear that the use of UK contracts could help employees claim the full protection of British law

The reach of UK employment law has previously been set out in Ravat v Halliburton Manufacturing and Services Limited by the Supreme Court, which stated that ‘the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works’.

Establishing that strength of connection will always be a question of fact and degree; however, the recent case of Green v SIG Trading has provided further clarity. The Employment Appeal Tribunal (EAT) established that the test must be an objective one, and that the wider context of the arrangement must be taken into account when applying the threshold.

Mr Green lived in Lebanon and worked in Saudi Arabia. His employer was a company registered in the UK; his manager and other support services were based in the UK; he was paid in pounds and registered with HMRC – although he was tax exempt. In addition, Green was employed on a standard UK contract governed by English law, which included references to UK statutory employment protections. When Green was made redundant, he sought to bring an unfair dismissal complaint in the tribunal.

His claim was initially rejected on the basis that he had stronger connections outside the UK and, therefore, the tribunal had no jurisdiction to hear his claim. In reaching its decision, the tribunal accepted the employer's argument that the contractual arrangement on UK terms was purely for reasons of ‘convenience’ since it did not have a standard form contract for use in Saudi Arabia.

Material factor

On appeal, however, it was found that the tribunal had wrongly disregarded the fact that English law governed the contract of employment, with the EAT considering this to be a material factor in the case. The tribunal should not have accepted the employer's subjective explanation over this objective fact.

While the parties may agree the governing law in terms of where a breach of contract claim would be dealt with, it is for the employment tribunal to determine what weight should be attached to this factor and if the statutory protections apply. The tribunal ought to have considered this and looked at what happened in practice – which in this case was that Green had a contract governed by English law and had in fact been permitted to bring a breach of contract claim in the UK employment tribunal. The EAT upheld Green's appeal, and the case is now due to be reconsidered by the tribunal.

Clearly, the tribunal could still reach the same decision in this case, but the spotlight on the jurisdiction of the employment tribunal serves as a useful reminder of the relevance of contracts and wording, and lays down the principles of how the judges must make an overall assessment of the situation in context. Crucially, it is made clear that the tribunal should not automatically accept an employer’s explanation for the way in which something has been done, even where that explanation is, on the face of it, perfectly reasonable.

What employers can do next

HR professionals who routinely use standard form contracts for overseas employees should take the opportunity now to review existing contractual arrangements. An assessment should be carried out to check whether the contracts used reflect the reality of the work situation and relationship with the employee. Have all contracts been tailored individually? Failure to do so could result in claims being brought, successfully, within the jurisdiction of an employment tribunal in the UK. Such an outcome could trigger costs from both a financial and reputational perspective, as overseas employees take advantage of the statutory protections afforded to them by UK law.

Katie Lamb is an associate in the employment, pensions and immigration practice with Maclay Murray & Spens