Presented by © McGrigors LLP 2010 SINGING THE BLEUSE… CHAOS IN INTERNATIONAL EMPLOYMENT LAW Gary Freer, Partner in Employment Law McGrigors LLP

2 © McGrigors LLP 2010 WHY DOES IT MATTER? Sending an employee overseas may give rise to legal issues and disputes before (what if they refuse to go?) during (e.g. disputes over bonus payments) after (e.g. redundancy, poor performance) an overseas assignment.

3 © McGrigors LLP 2010 You will need to know, in advance and as issues arise, what your legal position is; Not all legal systems are the same – e.g. the US concept of “employment at will” is not accepted in Europe or elsewhere; You therefore need to know; - which law applies; and - in which country’s courts any dispute would be adjudicated.

4 © McGrigors LLP 2010 DIFFERENT CLAIMS, DIFFERENT RULES Imagine this: Marianne is an assignee, is sent from Paris to work mainly in London, reporting to a line manager in Paris. She visits Paris 6 times a year to attend team meetings. She is bitterly disappointed by the amount of bonus awarded to her for a year in which she took maternity leave. She resigns in disgust.

5 © McGrigors LLP 2010 Marianne has potential claims for breach of contract (both in relation to the size of the bonus awarded, and her notice period); unfair (constructive) dismissal; Sex discrimination; In relation to each of these claims, the applicable rules as to whether English or French law applies, and whether she has to sue in Paris or London, are not consistent.

6 © McGrigors LLP 2010 CAN’T WE SIMPLY AGREE CHOICE OF LAW AND JURISDICTION? Commercial contracts often do just that (and often agree that disputes will be resolved by private arbitration rather than public litigation in court); But in employment disputes there is much less scope to do this. Many employment rights are derived not from the contract but from national and EU legislation; It is not usually possible to “contract out” of those.

7 © McGrigors LLP 2010 UNFAIR DISMISSAL The UK’s Legislation – the Employments Rights Act 1996 – does not include any statutory test or criteria which would help in determining the territorial scope of its protection from unfair dismissal. The Courts have had to fill the gap, and the leading case is Lawson v Serco.

8 © McGrigors LLP 2010 Lawson v Serco – THE BASIC PRINCIPLE Is the individual working in Great Britain at the time when he/she is dismissed? This is a question of law – no room for discretion in “hard luck” cases. Three possible categories of exceptions.

9 © McGrigors LLP 2010 THE LAWSON V SERCO EXCEPTIONS British enclaves – e.g. overseas embassies; those posted abroad by British employees for a business carried on in Great Britain, e.g. foreign correspondents of The Times; and other peripatetic employees with equally strong connections with Great Britain and British employment law.

10 © McGrigors LLP 2010 THE COURT’S INCONSISTENT RESPONSE Good example – RAVAT -v- HALLIBURTON British citizen and resident assigned from UK to work in Libya for German subsidiary of a US corporation; Not employed under Expatriate Policy – but under International Commuter Assignment Policy – did 28 days work in Libya, followed by 28 days at home in England; Paid UK tax and paid in sterling.

11 © McGrigors LLP 2010 Reported to manager in Cairo, who he met face to face only in London; HR admin all conducted by Aberdeen office; repeatedly reassured, verbally and in writing, that his employment relationship was governed by UK law, even when posted abroad; Redundancy selection, consultation and appeal carried out in Aberdeen, redundancy payment calculated in accordance with UK law.

12 © McGrigors LLP 2010 Tribunal decision: - It had jurisdiction to hear Mr Ravat’s claim of unfair dismissal; Employment Appeal Tribunal decision: - No jurisdiction. What the contract said, and the reassurances given, were not relevant.

13 © McGrigors LLP 2010 Court of Session (Scottish Court of Appeal) : - by a 2.1 majority, the Tribunal did have jurisdiction – but for different reasons, and differing interpretations of Lawson v Serco; Halliburton has sought permission to appeal to the Supreme Court – so we may get some much needed clarity about how the Lawson v Serco exceptions are intended to apply.

14 © McGrigors LLP 2010 What if the expat is absent, e.g. if on long term sickness leave and repatriated from the host country? YKK Europe v Heneghan, English Employment Appeal Tribunal, (2010) gave some guidance on the facts which may be relevant in deciding whether there was jurisdiction to hear an unfair dismissal claim:

15 © McGrigors LLP 2010 Why the employee was absent; Length of absence before dismissal; Where the employee was ordinarily working, or based, and for low long before his absence began; Where the employee would have been working at the date of dismissal if he had not been absent; Was there an “active employment relationship” between the dates of absence and dismissal; From where the contract was being operated at dismissal; Whether the Tribunal would have had jurisdiction as at the date on which the absence began.

16 © McGrigors LLP 2010 DISCRIMINATION CASES Mak v British Airways (2010) Claims for race and age discrimination brought by cabin crew. Statutory test is that Tribunal has jurisdiction if an employee does his work wholly or partly in Great Britain. What does “partly” mean?

17 © McGrigors LLP 2010 Crew were based in and lived in Hong Kong; Ms Mak completed 28 flight cycles between HK and London each year; 30 minutes in British airspace; 45 minutes debrief on the ground; 58 hours rest in London hotels; Occasional safety and emergency training in London.  Decision: “partly” means “more than de minimis” (i.e. not much!) – and the Tribunal had jurisdiction.

18 © McGrigors LLP 2010 THE “BLEUSE BROTHERS” A series of cases which, based on EU law principles, have caused confusion and uncertainty; Bleuse v MBT Transport (2008); Duncombe v Secretary of State of Children, Schools and Families (2009); MOD v Wallis & Grocott (2010).

19 © McGrigors LLP 2010 Bleuse v MBT Transport UK Working Time Regulations applied to a lorry driver who worked in Austria and Germany Employer was an English company Contract of employment was subject to English law Unfair dismissal complaint unsuccessful Working Time Regulations were EU rights so had direct effect

20 © McGrigors LLP 2010 DUNCOMBE The facts: - D employed to work for the UK Government as a teacher in Germany – he did no work at all in the UK; He had a contractual fixed term, expressly governed by English law, of 9 years. When this expired, he was dismissed. He was not redundant and there were no issues with capability or conduct; Mr Duncombe brought claims for breach of contract (wrongful dismissal) and unfair dismissal.

21 © McGrigors LLP 2010 The outcome: - The Fixed Term Regulations 2002 had changed English Contract Law, and Mr Duncombe could rely on this to claim damages for a notice period; The Tribunal did have jurisdiction to hear the unfair dismissal claim even though, under Lawson –v- Serco, it would not have done.

22 © McGrigors LLP 2010 The reasoning: - The “Principle of Effectiveness” applied in this situation since the remedy of unfair dismissal in this case was founded on a right derived from European Law; and the Employment Tribunal was entrusted with hearing cases under the legislation which implements that right into English law. The UK Courts had to provide an effective remedy (even if some other EU state might also do so).

23 © McGrigors LLP 2010 THE WRONG TROUSERS? Wallis & Grocott (2010) This decision opens up the prospect of the Bleuse principle being applied to give the UK Courts and Tribunals jurisdiction over a wide range of disputes involving employment rights which are derived from EU law (and, probably, arising within the territories of EU member states); and may override the express provisions of UK legislation.

24 © McGrigors LLP 2010 The facts: - The claimants were employed by the MOD within schools attached to NATO establishments in Belgium and the Netherlands. Their contracts specified that they were subject to English law. Both were married to UK servicemen and were dismissed when their husbands left the armed forces; Both brought claims for unfair dismissal and sex discrimination.

25 © McGrigors LLP 2010 Unfair dismissal: - The tribunal had jurisdiction under Lawson v Serco principles – the requirement of being married to serving British officers was a sufficient connection with the UK to fall within the scope of the general exception.

26 © McGrigors LLP 2010 On sex discrimination Neither claimant met the statutory requirement in the SDA of working at least partly in Great Britain, but; since their contracts were expressly subject to English law, and sex discrimination rights derive from an EU Directive, the Bleuse principle applied and required the UK Tribunal to accept jurisdiction. This overrides the express wording of the SDA itself.

27 © McGrigors LLP 2010 Practical implications Note that the Bleuse principle applies when English law is the “proper law of the contract”; This will be the case if English law is expressly chosen or the contract is silent and it is most closely connected with English law; That may apply to a huge variety of employment rights including all forms of Discrimination/Equal Pay law, TUPE and Collective Redundancy; Consider a possible need to spell out that some other country’s law applies to all (or some?) of the contractual or statutory rights.

28 © McGrigors LLP 2010 Application of Jurisdiction and choice of law Samengo-Turner v J&H Marsh & McLennan  English employee subject to restrictive covenants governed by NY law. NY court upheld enforcement of covenants. Employee had proceedings restrained by English court as employee can only be sued in court of his domicile. Duarte v Black and Decker  Restrictive covenants expressed to be governed by Maryland law would not be upheld in English court if the covenants would not be enforceable under English law as a matter of public policy.

29 © McGrigors LLP 2010 The International Assignment Letter Variation of domestic contract of employment? Does it need to cover confidentiality and restrictive covenants? Check compatible with law of host country Issues to consider  Sick pay  Maternity leave  Right to terminate assignment

30 © McGrigors LLP 2010 THANK YOU Contact details: Gary Freer Partner McGrigors LLP 5 Old Bailey London EC4M 7BA DDI: Fax: