Hughes v Alan Dick & Co Ltd.

This is the oral renewal of an application for permission to appeal in relation to an appeal from the Employment Appeal Tribunal, HHJ Peter Clark sitting alone, permission having been refused on paper by Smith LJ.

The claimant and would-be appellant brought proceedings in the Employment Tribunal, claiming against his employer sums due under the contract of employment and other matters, including unlawful deduction from wages, damages for wrongful dismissal and also compensation for unfair dismissal. No issue arises at this stage in relation to contractual claims; in respect of those it is accepted that the Employment Tribunal has jurisdiction and the claim is properly made. I daresay there is an issue as to whether the claim is justified, but that is another matter.

The issue arises in relation to unfair dismissal. It may also apply in relation to other statutory claims under the Employment Rights Act, but the focus has throughout been on the unfair dismissal claim. As to that, the question is whether the claimant’s employment was within the scope of the relevant legislation. If it is, his claim is properly made and must be determined by the Employment Tribunal; if it is not, it cannot be made here or anywhere. The distinguishing factor is that the claimant was employed to work abroad and the whole of his period of employment was spent based in Port Harcourt, Nigeria.

The question of whether in those circumstances he had a claim under Section 94 of the Employment Rights Act 1996 for unfair dismissal was taken as a preliminary issue and was decided against the claimant by Employment Judge Sara on 30 May 2008. His appeal to the Employment Appeal Tribunal was dismissed on 3 December 2008.

He was employed by an English company called Alan Dick & Co Ltd. That company is incorporated in England and it carries on business here, but it also has international business interests. As he said on his ET1 form, he worked at Port Harcourt, Nigeria. His employment lasted from March 2005 to December 2007 when he was, as he contends, wrongfully and unfairly and certainly summarily dismissed. The contract was entered into in the United Kingdom; he was no doubt recruited here, and the termination was, as the employment judge held, by a letter which was sent from the UK company.

Section 94(1) of the Employment Rights Act 1996 is as follows:

“An employee has the right not to be unfairly dismissed by his employer.”

In the present state of the legislation it says nothing as to territorial limits, although it used to until 1999. The authoritative guide on territoriality is in a decision of the House of Lords Lawson v Serco [2006] UKHL 3, to which I will turn shortly.

Employment judge Sara based his decision on the following facts. The respondent is a company based in England with an international business, and businesses in twenty countries. It has a Nigerian subsidiary trading there with its own employees. The claimant is domiciled in England and was employed by the respondent under a contract, naming the employer as Alan Dick Middle East, which, however, is not a separate company, but, as he said, a branch of the respondent -- as it might be said, a trade name for the respondent -- in a particular aspect of its operations. It is conceded that the employer was the respondent, the English company. His job title was “Area Supervisor, based in Port Harcourt, reporting to the regional manager in connection with the business of the employer in Nigeria”. Later he was promoted to the grade of Regional Supervisor: that was done on the letterhead of the Nigerian subsidiary; later still, a salary increase was notified to him on the letterhead of the respondent. He was summarily dismissed by letter sent from the head office of the respondent in Cheltenham. The contract was entered into in England; the claimant was paid to start with in US dollars, but from July 2005 in sterling, and in each case directly into a UK bank account of his. He was paid at expatriate rates and he was covered for health insurance by a UK-based company.

Although directly employed by the respondent, he worked “embedded”, in the employment judge’s words, in a substantial organisation in Nigeria operated by the Nigerian subsidiary company. The employment judge says the fact that the respondent was based in England and that the claimant was recruited in England was not enough and that is clear, in fact, from Lawson v Serco. The fact that he worked for a business conducted in a foreign country belonging to a British owner or to a branch of a British business was not enough either. Payment in sterling to a UK bank account and the dismissal from the UK were not enough. Because all of his work was carried out in Nigeria in the context of a substantial business operated there, despite the fact that there were some factors connecting the case with the United Kingdom, the employment judge held that the connection with Nigeria was greater and stronger than that of the United Kingdom and that, accordingly, Mr Hughes was not entitled to claim for unfair dismissal. That ruling is subject to appeal only on the basis that it was wrong in law. That was the basis of the appeal to the Employment Appeal Tribunal. In that tribunal, Judge Clark approached the matter on the basis that the claimant was working for the branch of the UK business run by the respondent. He rejected an argument based on forum non conveniens and also an argument that the employment judge had not given sufficient reasons for his decision.

For the appellant, Mr Khan contends that the decision is appealable based on the basis of reasonable prospects of success and on the alternative basis of some other compelling reason. Taking reasonable prospects first, part of his argument on paper was based on convenient forum and part on the basis that there was some sort of equitable jurisdiction of the Employment Tribunal to hear the claim. The latter point Mr Khan wisely abandoned in his oral submissions. So far as convenient forum is concerned, that seems to me to be an irrelevance; the Employment Tribunal is the only forum for this claim. If Mr Hughes has such a claim he can bring it at the Employment Tribunal; if he does not have such a claim he cannot. Mr Khan does, however, submit that the fact that the ILO Convention has not been ratified or adopted or implemented by Nigeria, so that there was no equivalent right under Nigerian law, is a factor which can be properly taken into account and was not, in considering whether the employment has a sufficient connection with England and Wales or Britain to be brought within the ambit of Section 94. I cannot see how that can be so.

Another strand to Mr Khan’s argument on paper, not elaborated this morning, is based on the reference to a branch of the respondent’s business. This has no special relevance to Section 94 of the Employment Rights Act. Whether a business in which a claimant is working is to be regarded as a branch of the respondent’s business, or as someone else’s business, for example, that of a subsidiary of the UK employer, or that of a third party to which the claimant is seconded, is a question which could be relevant as part of the facts generally, but it seems to me there is nothing of substance in Mr Khan’s criticism of the employment judge of having ignored the concession of the respondent by referring to a branch of the respondent. The real issue is whether the employment judge’s decision, as an assessment of the balance of the various connecting factors, can stand as correctly based in law with what the House of Lords said in Lawson v Serco.

Lord Hoffman said at paragraph 25 of his speech that the starting point was that the Section applies to employees working in Great Britain. Mr Hughes is not such a person. He recognised that it could apply to other employees, including peripatetic employees, whom he considered at paragraphs 28-34 of his speech. Mr Hughes was not such a person either. He also considered that it could apply in certain circumstances to expatriate employees, and that he considered at paragraphs 35-40 of his speech, and that is the category into which Mr Hughes falls. Lord Hoffman started at paragraph 36 by saying:

“The circumstances would have to be unusual for an employee, who works and is based abroad, to come within the scope of British labour legislation.”

But he held that there are some who do, and indeed in the three cases that were considered by the House of Lords, reported under the name of Lawson v Serco, two of them were concerned with expatriate employees who were held to have the benefit of Section 94.

At paragraph 37 Lord Hoffman said it would be very unlikely that someone working abroad would be within the scope of the section unless he was working for an employer based in Great Britain, but that would not be enough. And he also considered that the fact that the employee happens to be British, or even that he was recruited in Britain so that the relationship was rooted and forged in this country, should not be sufficient to take the case out of the general rule that the place of employment is decisive; something more is necessary. At paragraph 38 he said this:

“Something more may be provided by the fact that the employee is posted abroad by a British employer for the purposes of a business carried on in Great Britain. He is not working for a business conducted in a foreign country which belongs to British owners or is a branch of a British business, but as representative of a business conducted at home.”

He gave the example of the foreign correspondent of a British newspaper working in Italy or China or wherever it might be, and he also cited an example, Financial Times Ltd v Bishop 2003 AER D 359, where someone working in San Francisco on behalf of the Financial Times made such a claim and the Employment Appeal Tribunal considered that a relevant factor, as to which there were no findings, was whether he was selling advertising space in San Francisco as part of the London business or whether he was really working on behalf of a business conducted in the United States, for example, in relation to the Financial Times American edition. That points neatly towards the possible contrast.

Paragraph 39 dealt with the more unusual case of a British employee operating within what amounts, for practical purposes, to an extra-territorial British enclave in a foreign country. That was the case of one of the claimants in Lawson who was working for the Ministry of Defence in a military base in Germany, and it was also the case of Mr Lawson himself who was working, albeit for a private company, at an RAF base on Ascension Island. That, of course, is not this case.

At paragraph 40 Lord Hoffman said this:

“I have given two examples of cases in which section 94(1) may apply to an expatriate employee; the employee posted abroad to work for a business conducted in Britain and the employee working in a political or social British enclave abroad. I do not say that there may not be others, but I have not been able to think of any and they would have to have equally strong connections with Great Britain and British employment law.”

It seems to me plain that the employment judge applied the correct test as described, set out in Lord Hoffman’s speech; he did not misdirect himself and he did not come to a conclusion which cannot stand with what the House of Lords said in Lawson v Serco. The basic position was that the claimant was employed to work, and did work, in Nigeria, in a business carried on in Nigeria largely by the Nigerian subsidiary company. There were, of course, connecting factors with England which I have mentioned and, as Mr Khan says, no doubt to the extent that the Nigerian business was successful it enured for the benefit of the English parent company. The employment judge had to weigh up the connecting factors either way, but it seems to me that none of them was compelling in favour of England and none of them was remotely as strong as the two expatriate cases at issue in Lawson v Serco. As I say, Mr Khan seeks to put into the balance the fact that there is no remedy under Nigerian law, as there might be under the ILO Convention, equivalent to Section 94. It does not seem to me that that can be a relevant factor. He also submitted that the decision would make it open to employers to evade the effect of Section 94 by posting their employees abroad. I have some difficulty in seeing that as a realistic danger, as someone such as Mr Hughes would not be recruited to work abroad unless there was a job for him to do there. In the case of someone who is recruited to work abroad or is at some point in the course of employment posted abroad, the question will be precisely how the balance of connecting factors is to be assessed, what is the nature of the business in which the work is being conducted abroad, and so on.

As it seems to me on the facts of the present case, it cannot be said that the employment judge erred in law in any respect in drawing the balance in the way that he did, and I see no reasonable prospect of success on this appeal. Equally, it does not seem to me that there is any point of general importance for which this would be a suitable case for clarification to be sought. No doubt the state of the legislation as described in Lawson v Serco poses problems for employment tribunals. It seems to me that the evidence of this case, both in the Employment Tribunal and in the Employment Appeal Tribunal, shows that those problems are well manageable and that they do not require any further assistance from this court on the facts of this case.

I would therefore dismiss the application.

I agree.