The Supreme Court has handed down an important decision for employers in the oil and gas industry, where employees work rotational shifts abroad but live in Great Britain during their rest periods.
In Ravat v Halliburton Manufacturing and Services Ltd the Court ruled that an employment tribunal has jurisdiction to hear an unfair dismissal claim brought by a person who works abroad where the employment relationship has a sufficiently close connection with Great Britain.The facts
Mr Ravat was made redundant by Halliburton in 2006 after working for them for 16 years. The company has a base in Aberdeen and provides tools, services and personnel to the oil industry. The employee lives in Preston, Lancashire and at the time of his dismissal he was working in Libya, although he had previously worked in London and Algeria.
The employee was engaged on a rotational basis working 28 days in Libya and then returning home to Great Britain for 28 days rest in accordance with Halliburton's international commuter assignment policy. Whilst in Britain he was not required to do any formal work and his travel arrangements and costs of living in Libya were met by Halliburton.
In relation to his work, he reported on a daily basis to an operations manager based in Libya and for compliance issues to Cairo. His HR contact was in Aberdeen. He was paid in sterling, taxed in Great Britain and received the same benefits as other British employees. When the rotational pattern of working abroad in Libya started in 2003 he received assurances from the company that he would remain a British employee.
After he was made redundant, and paid a redundancy payment in accordance with the Employment Rights Act 1996, he raised a grievance and appealed against his dismissal. Although the decision to dismiss him had been taken by Mr Strachan who was based in Cairo, the grievance and appeal meetings all took place in Aberdeen. Mr Ravat subsequently claimed unfair dismissal, and Halliburton argued that the employment tribunal in Britain had no jurisdiction to consider his unfair dismissal claim.
The legal position
The position with employees working abroad changed in 1999 when section 94 of the Employment Rights Act 1996 was amended to remove the provision that employees who “ordinarily worked outside the UK” were excluded from bringing a claim. Following this repeal the statute was silent on the point of employees who work abroad and it has been left to case law to fill the vacuum.
In Lawson v Serco in  ICR 250 the House of Lords considered three conjoined appeals dealing with employees who worked abroad but had a connection with Great Britain. They set out three circumstances in which employees could bring such claims in Britain, which were:
(1) employees working here at the time of dismissal
(2) peripatetic employees
(3) expatriate employees posted abroad to work for a business conducted in Great Britain, or working in a political or social British enclave abroad
Mr Ravat did not fit easily into any of these categories, which made his case so difficult to reach a firm view on. Even the judges considering his case took different views at each stage. The employment tribunal ruled that Mr Ravat did have jurisdiction to bring a claim, explaining that there was a substantially close connection to Great Britain. The Employment Appeal Tribunal disagreed and said that Mr Ravat fell under the expatriate category of Lawson. He then appealed to the Inner House of the Court of Session, where again he was successful but with each judge taking a different view about which category of Serco he fell into. Halliburton appealed to the Supreme Court.The decision
The Supreme Court held that in the present case, a number of factors pointed towards Great Britain as being the place with which the employee’s employment had the closer connection. Accordingly, Mr Ravat had jurisdiction to bring an unfair dismissal complaint.It considered the following factors to be relevant:
- The employee’s home was Preston, Lancashire
- The employer’s business was based in Great Britain, even though the actual work was for another subsidiary company
- The employee was treated as a ‘commuter’ with a rotational working pattern
- All the benefits which the employee would have been entitled to had he been working in Great Britain were preserved for him
- The employee’s employment contract indicated that the employment relationship was governed by British employment law
- The human resource team which dealt with the termination of the employee’s employment was based in Aberdeen
The Supreme Court disagreed with his employer's argument that his place of residence should be irrelevant in a claim for jurisdiction relating to his work. They argued that all that should matter was the place where he was working. The Supreme Court held it was relevant. “It was the reason why he was given the status of a commuter, with all the benefits that were assigned to it which, as he made clear, he did not want to be prejudiced by his assignment.”The Supreme Court’s reasoning
The Supreme Court stated that the right to bring an unfair dismissal claim under the Employment Rights Act 1996 was not expressly confined to employment in Great Britain, but noted that there had to be some limitations and it would not simply apply to anywhere in the world.
It stated the general rule that the place of employment is decisive. However, an exception can apply where the employment relationship has a stronger connection with Great Britain than with the foreign country where the employee works. In those circumstances, the employee should have the right to bring an unfair dismissal claim.
The Court noted that it would always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule. It went on to explain that it will be extremely difficult for genuinely expatriate employees to ever claim unfair dismissal in Great Britain.Comment
This judgment will be relied on by other employees in the oil and gas industry with similar rotational working patterns. This decision considerably extends the three categories of employees working abroad (which were defined in Serco) who could rely upon British employment law.
Internationally mobile employees are far more likely to argue that they should enjoy Britain's regime of employment protection, particularly when local laws that apply abroad often provide little protection. However, according to a recent OECD report the UK comes second in the world for ease of dismissal, with the US coming first. Turkey, apparently, has the highest stringency of employment protection.
This case does not mean that every employee who works abroad but lives some of the year in Britain will be able to establish a sufficiently close connection with the country to bring a claim. In this case there were a multitude of factors which pointed to Great Britain being the jurisdiction in which to bring the complaint because the employee had such a close connection with the country. The test is whether the connection is sufficiently strong for Parliament to regard it as appropriate for the employment tribunal to deal with the claim.
Each case will turn on its own facts, but employers need to be aware of the factors which point towards a substantial connection with Great Britain. These include:
- Currency of salary and place of taxation
- The law governing the contract of employment
- The law of the company policies and procedures which is applied to the employee
- Where the employee's HR contact is based
- Where the employee lives when he is not working
Whilst none of these factors on their own will be conclusive, they are all relevant. The Supreme Court made it clear that parties cannot ‘contract in’ to the jurisdiction of the employment tribunal. A holistic analysis of all the facts is required. Employers with employees who work under these rotational arrangements should review their approach to consider whether British employment protection would be relevant.Dundas & Wilson
Finlay McKay is a senior associate in the employment team at UK Law firm Dundas & Wilson, a commercial law firm highly rated by clients as well as by chambers and Legal 500 directories. Whatever the client, Dundas & Wilson works tirelessly to deliver the right results at the right value.
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