The Scope of Section 94: Anything Goes

February 9th, 2012

Ever since the judgment of Lord Hoffmann in Lawson v Serco Ltd [2006] UKHL 3; [2006] ICR 250, the territorial scope of the protection from unfair dismissal contained in s.94(1) of the Employment Rights Act 1996 has been a matter of some debate. Lord Hoffmann famously drew distinctions between those who worked in GB and those who worked abroad (the latter being outside the scope of s.94); peripatetic employees who were based in GB (within the scope); and expatriate employees who are posted abroad for a GB company or who work in an enclave abroad, such as an embassy, who are also caught by s.94.

The difficulty, as tribunals quickly found, is where the facts of a case do not meet any of those categories. What then? This was the issue before the Supreme Court in Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC 1. Lord Hoffmann, in Lawson at [40], had suggested that his categories were not exclusive, but that other cases would need “equally strong connections”. Lord Hope, in Ravat at [25], noted the complaint of the tribunal below that little appellate guidance had been provided and rather optimistically suggested that the judgment of Lady Hale in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36; [2011] ICR 1213 had provided clarity when she said, at [8], that one need not torture cases to fit the existing categories.

If Duncombe was of little use in providing tribunals with assistance, it is unfortunately the case that the judgment of Lord Hope in Ravat will not be much more helpful. The Court has provided a new test: “whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain”: at [29].

Tribunals might be forgiven for thinking that they have simply been swapped one vague test – strong connections equal to those of an expatriate posted abroad or in an enclave – for an even vaguer one. The Supreme Court has, in effect, abandoned the field. Indeed, Lord Hope expressly disavows it being a test at all, stating that it is a question of fact for the tribunal. The question of law is simply whether s.94(1) applies or not. One suspects that there is going to be a fairly regular flow of appeals to the EAT to work out whether or not particular factors relied on by the tribunal are appropriate to take into account at all, let alone the weighting which should be given to particular factors over others.

What factors might be relevant? Following Ravat, it seems as though more or less anything is in play. Being paid in £sterling into a GB account, with tax and NI deducted is relevant. Being designated as a commuter worker (in Ravat’s case, to Libya), with travel costs paid by the employer is relevant. Being part of the GB pay structure, HR control and pension scheme is relevant. Working in Libya for a German company and being dismissed by a manager in Cairo are also relevant, although apparently outweighed in Ravat. Rather more debatably, the location of the employee’s home is apparently also relevant, despite this being an unusual factor to take into account in an employment analysis, as is whether the employee is a British national, despite the protection of s.94 never having been restricted by nationality.

Moreover, the proper law of the employment contract and assurances given the employer about the application of UK law are also relevant: at [32]-[33]. This is a quite startling proposition, on two bases. The first, which Lord Hope acknowledged, is that parties cannot estop a matter of jurisdiction. The second, which the Court completely ignored, is that s.204 of the 1996 Act expressly provides that “For the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom, or of a part of the United Kingdom, or not.” This must surely remove choice of law (of any sort) from the analysis altogether. Although Lord Hope asserted that parties cannot contract in (or out) of the jurisdiction of the tribunal, this is precisely the effect of the Ravat judgment.

The approach in Ravat has imported by the back door an analysis which looks rather like a forum conveniens enquiry into deciding whether a case falls within s.94. Not only is this a method of statutory interpretation which is difficult to justify, but Lord Hoffmann himself expressly ruled out the application of a forum conveniens analysis to s.94 in Lawson at [24]. It is certainly true that the Ravat decision is employee-friendly – the majority of overseas worker cases will now most likely be caught by s.94 if a long enough list of factors can be produced – but it is open to question whether this is quite what Parliament had intended. Instead, the tribunals are left with a lengthy fact-finding exercise combined with a distinct lack of clarity as to what the relevant facts they should be finding are. From now on, when establishing the scope of s.94(1), anything, it seems, goes.

John Cavanagh QC appeared for Halliburton.

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