UK employment law: Which rules apply?

From time to time UK-based employers will face claims in UK employment tribunals from staff working abroad. Whether the staff members in question can bring such a claim will be dependent on the circumstances under which they are working overseas.

The latest judgment of the Court of Appeal in the case of R o/a Mohammed Rafi Hottak and AL vs the Secretary of State for Foreign and Commonwealth Affairs and the Secretary of State for Defence addresses one aspect of this issue, where employees are both recruited and work overseas. Employers are often surprised to find that they can face claims in the UK where, for example, a British contractor wins a construction contract to build on a site overseas and recruits/deploys staff locally. The case appears to limit the extent to which discrimination claims can be brought in the UK tribunals in those circumstances.

The claimants, both Afghan nationals, were employed by the British government as interpreters working with the British Armed Forces in Afghanistan. They worked under local contracts of employment governed by Afghan law, were paid in US dollars, and were recruited and worked exclusively in Afghanistan. They brought judicial review proceedings to challenge a policy that the British government had put in place to provide protection and benefits. They claimed the terms were less generous than those given to individuals employed in Iraq, and this constituted race discrimination on the basis of their nationality (under the Equality Act 2010).

The question was whether the territorial scope of the Equality Act 2010 extended to cover their employment. The Court of Appeal decided that the Equality Act 2010 did not apply to the claimants.

So when do UK laws apply? The general rule is that the place in which a person is employed dictates which laws apply and the jurisdiction in which an individual is entitled to bring a claim. So an Afghan interpreter working in Afghanistan would be subject to Afghan law. Here the Court of Appeal applied the same principles for discrimination law as would apply to an unfair dismissal claim (from the leading case of Lawson v Serco Ltd). As a result, the protection available under UK unfair dismissal and discrimination laws only extends to four categories of employee:

• “Standard” cases, where the employee ordinarily works in Great Britain
• Peripatetic employees, who move between jurisdictions but have a UK base
• Some expatriate employees posted abroad by a British employer
• Other employees who have an “equally strong connection” with Great Britain.

The Court of Appeal held that the Afghan interpreters did not fit any of these categories and therefore could not claim under British discrimination law. The claimants were locally engaged to provide local support. Their only connection to Great Britain was their employer. This was not sufficient for UK employment law to apply to them.

The case provides clarification, confirming that the scope of the Equality Act 2010 is the same as the Employment Rights Act 1996 (which includes protection against unfair dismissal). This seems sensible, as the two types of claim are often brought together and both are usually dealt with by the employment tribunals.

The Court of Appeal rejected the claimants’ emotive argument that discrimination law should apply more widely than unfair dismissal law as it concerned “the very essence of man’s humanity to man”. The court’s decision that parliament could not have intended British discrimination legislation to apply worldwide seems intuitively correct.

What does this mean for the construction sector?

It is a reassuring judgment for all British employers who engage staff abroad. The decision means that British contractors are highly unlikely to face a claim of discrimination in a British employment tribunal relating to an employee who was engaged abroad on local terms and conditions. In the global construction market, where supply chains extend around the world, overseas-based, locally recruited employees will often have different terms and conditions of employment to their British-based colleagues. This recent decision means that such differences in local practices and arrangements will not usually enable employees to bring race discrimination claims in Great Britain. Of course, employers need to be wary of claims which may be made in overseas courts by such employees and will need to be compliant with local labour laws.

It is important to note, however, that the situation may be very different where employees are sent out from the UK to work on overseas sites or where a British worker spends some time in Britain and some in another jurisdiction. If the employee has stronger links with Great Britain and with UK employment laws than with the country in which they work, they may still be able to bring a claim in the UK employment tribunals.

If an employee working abroad makes a claim in a UK employment tribunal, the first step will be for the tribunal to carry out a detailed factual analysis, taking in contractual and practical arrangements applying to their work, following which a decision can then be made as to which jurisdiction applies. This can be factually and legally complex.

Michael Ryley is a partner in the Employment, Pensions and Immigration Team at Weightmans