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Territorial Jurisdiction of the UK Employment Tribunal

Does an Employment Tribunal, in deciding whether an employee who lives and works abroad is able to raise a claim of unfair dismissal in the UK, have to make a comparison between the employee’s connection with Great Britain and the employee’s connection with the foreign country?  No, said the Court of Appeal in the case of Creditsights Limited –v- Dhunna.

Mr Dhunna was employed by the UK subsidiary of a US company providing independent investment research to investors around the world.  Mr Dhunna was initially based in London and was subsequently transferred to Dubai.  When the Dubai office closed, Mr Dhunna to Singapore was dismissed and he raised a claim of unfair dismissal.  When deciding whether it had jurisdiction to hear Mr Dhunna’s claim, the Employment Tribunal (ET) concluded that Mr Dhunna had severed his links with the UK when he moved away and the he had only remained on the payroll of the UK subsidiary and received administrative support from them for Creditsights’ convenience.  Accordingly, the ET determined that Mr Dhunna did not have a sufficiently strong connection to Great Britain and with British employment law to allow his claim to proceed.  This decision was overturned by the Employment Appeals Tribunal (EAT), which held that the ET should have compared the strength of Mr Dhunna’s connections with Great Britain and British employment law with the strength of his connections with Dubai.  However, Creditsights Limited appealed against this decision and the Court of Appeal overturned the EAT’s decision, stating that such a comparative exercise was not necessary.  

The Court of Appeal confirmed that the general rule regarding the territorial jurisdiction of section 94(1) of the Employment Rights Act 1996 (the right not to be unfairly dismissed) is that an employee who is living and working, or is based, abroad at the time of his dismissal will not be covered, unless, he can demonstrate that he has a much stronger connection with both Great Britain and with British employment law than with any other system of law.  This means that in practice, for employees who live and work abroad, the ET must compare the employee’s connection with both locations and systems of law.  However, this case made it clear that the relative merits of the competing systems should not form part of that assessment.  The aim of the exercise is only to determine whether the employee will fall under the exception to the territorial jurisdiction rule by demonstrating that he has a stronger connection with Great Britain and British employment law, not to determine which legal system will be more favourable to the employee.  

Employers deploying individuals overseas should therefore be mindful of what “connection(s)” the employee retains with the UK as this will have a bearing on whether or not the employee will be able to establish jurisdiction in a UK Employment Tribunal.

For more information please contact Martin Sinclair or Nicola Gray or call 01224 632464.

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