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Court of Appeal: test for employment tribunal's jurisdiction does not include comparison of different legal systems

Out-Law News | 24 Sep 2014 | 12:20 pm | 3 min. read

The test for whether the UK employment tribunal has jurisdiction to hear an unfair dismissal claim from somebody who lives and works abroad should not include a comparison of the relative merits of the different employment laws that could apply, the Court of Appeal has found.

Satpal Dhunna had been employed by the UK subsidiary of CreditSights Ltd, a US-registered company. Although he originally worked in London, he was working in Dubai when he was dismissed from an office which was considered by the company to be "a branch or representative office of London". Restoring the employment tribunal's original ruling, the Court of Appeal said that the only test was one of "sufficiently strong connection" between the employee and the UK.

In his leading judgment, Lord Justice Rimer said that there was "no support" in previous case law for "a comparison of the merits of the local employment law of the employee's workplace at the time of his dismissal with that of the employment law applicable in Great Britain".

"The general rule is that an employee who is working or based abroad at the time of his dismissal will not be within the territorial jurisdiction of [the Employment Rights Act], but that exceptionally he may be if he has 'much stronger connections both with Great Britain and with British employment law than with any other system of law'," he said.

"The relative merits of any competing systems of law have, however, no part in the inquiry … Why should they? The object of the exercise is not to decide which system of law is more or less favourable to the employee: it cannot realistically have been parliament's intention that the 'general rule' in relation to expatriate employees should be regarded as ousted in any case in which the local employment law is less favourable to the employee than British employment law," he said.

Dhunna started working for CreditSights in London in January 2006, at a time when the firm and its US parent company had only two offices between them but dealt with clients around the world. In 2008, he began working with Middle Eastern, Asian and African clients exclusively in anticipation of his move to a planned Dubai office, which opened in 2009. Dhunna formally transferred to the Dubai office in October 2009, but was dismissed for alleged gross misconduct in May 2010. The UK-based company played no part in the dismissal decision.

Dhunna raised a claim with the employment tribunal in London under section 94 of the Employment Rights Act (ERA), which gives employees the right not to be unfairly dismissed. Although the ERA does not contain any geographic limitations, the UK courts held in 2006 that some territorial limitation into the jurisdiction of an employment tribunal had to be implied. This was because it was "inconceivable that parliament intended the [ERA] to confer rights upon employees working in foreign countries and having no connection with Great Britain".

The employment tribunal judge dismissed Dhunna's claims on the grounds that his work in Dubai was not "as a representative of a business conducted in the UK" and that his connection with the London office was "only as a matter of administrative convenience". His decision was overturned by the employment appeal tribunal (EAT); the judge of which said that three cases which had been decided in the interim made it clear that the tribunal judge should have carried out a "comparative exercise".

At the Court of Appeal, Lord Justice Rimer said that although some form of comparative exercise was required where the person making the claim was "employed wholly abroad", this should be limited to a comparison of the connections between that person and the two legal systems.

"The fact that Mr Dhunna was engaged under an English contract of employment by a company incorporated in England and Wales might be thought to be a compelling factor in his favour," he said. "But it is not; Lord Hoffman made it clear in [the 2006 case] that what counts is whether or not the employee was working in Great Britain at the time of his dismissal, rather than what was contemplated when his employment contract was made, and [the tribunal judge] would not have overlooked that."

"Whilst I recognise that [the tribunal judge] did not formally explain that he was carrying out any comparative exercise, I agree with [CreditSights] that his reasons reflected a full, careful and sufficient assessment of the facts so far as they related to the competing pulls of the different jurisdictions in play such as to enable him to carry out the required evaluation of whether or not Mr Dhunna had established a sufficiently strong connection with Great Britain and British employment law to except himself from the general rule. In substance, he carried out a sufficient comparative exercise," he said.