When employees work abroad

With international commerce and industry growing every day, more employees than ever are working abroad. This impacts on all aspects of the employment relationship in terms of reporting lines, expenses and tax issues.

Requirements for working hours, annual holidays and public holidays can also vary dramatically from country to country. It also impacts upon the employee's rights and where they can enforce them.

The Employment Rights Act 1996 (ERA 1996) dictates a number of terms that must be notified to an employee and which form the particulars or contract of employment.

One of these relates to employment outside the UK.

If the employee is to work outside the UK for more than a month, then the statement must include details of the length of time the employee is required to work outside the UK, the currency they will be paid in while abroad, details of the additional benefits of remuneration they are to receive and the terms and conditions relating to their return to the UK.

The act also refers to the effect that a period working abroad has on continuity of service in calculating length of service for eligibility for a redundancy payment, and also in respect of the length of service for the redundancy payment itself.

In essence, each part or whole week worked abroad is discounted in calculating the period of employment for redundancy/the redundancy payment.

In all other respects, the actual length of continuous service is unaffected by any spell of employment abroad.

Prior to 1999, and the repeal of the ERA 1996, it was clear that employees who ordinarily worked outside the UK were not entitled to unfair dismissal rights.

You had to work in Great Britain to claim unfair dismissal. The position now is rather murky and based on case law alone.

The decision of Serco v Lawson, which was reported earlier this year, has shed some light on the position.

The UK-based company Serco employed Mr Lawson to work as a security operator on Ascension Island, where Serco had a contract to service the RAF base.

Ascension is small volcanic island in the South Atlantic with no indigenous population.

Both Serco and Mr Lawson had close connections with the UK, but all the services were performed on Ascension.

The House of Lords held that this was sufficient for Mr Lawson to have the right to claim unfair dismissal in Great Britain.

Occasions The House of Lords made it clear it will be unusual that an employee who works and is based abroad has unfair dismissal rights under the ERA 1996, although it is not impossible.

It stated there may be occasions where there are such powerful factors to associate the employment relationship with Great Britain as against the country where the employee is actually working.

The House of Lords then went on to give two examples where it anticipated that employees working abroad would be covered under the ERA for unfair dismissal.

These are where the employee is sent abroad to work for a company based in Great Britain, or where an employee is working in a social, or political, British enclave based outside of Great Britain.

There are also discrimination claim implications where an employee works outside the UK.

For example, in the case of Saggar v the Ministry of Defence, it was ruled that whether a tribunal has jurisdiction to hear sex or race discrimination cases in Great Britain is not solely dependant on where they were working when the alleged discrimination took place.

The Court of Appeal said that where the employee worked throughout their employment is also key.

So, for example, if an employee worked in the UK for ten years and was then posted to Japan for six months and was discriminated against in Japan by reason of their sex, their claim may well still be heard in the tribunal in Great Britain.

In October 2005, the boundaries were widened further by the Employment Equality (Sex Discrimination) Regulations 2005.

This extended the Sex Discrimination Act and the Equal Pay Act to give protection to employees who work wholly outside of the UK, as long as they are ordinarily resident in Great Britain and are working for a British company.

This is very wide indeed, as it is hard to reconcile that someone who has worked in, say, Vietnam for ten years can truly be said to be ordinarily resident in the UK.

If they were living in the UK before they moved to Vietnam for the job, and the company is British, then the regulations protect them.

No doubt this is still not the end of the story!

n Contact: Natalie Roach, 01295 270999