United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Ms C McCrossan (Solicitor) Quantum Claims Employment Division 70 Carden Place Queens Cross Aberdeen AB10 1UP
For the Respondents	Mr B Napier QC (of Counsel) Instructed by: Messrs Mackinnons Solicitors 14 Carden Place Aberdeen AB10 1UR


 


SUMMARY

The claimant comes from Aberdeen. He was employed by Ben Line Steamers and his employment was transferred, ultimately, to the respondents, a company registered in Singapore. The respondents were a subsidiary of a Swedish company. From a date in 1998 until his dismissal, the claimant worked as a storeman on a rig situated in far eastern waters. The operations of the rig were controlled by a UK company which was based in Aberdeen. From a date in 1999 until his dismissal, the claimant resided in Thailand. He returned to Scotland after that. The day to day management of the rig was carried out by an employee of the respondents who reported to another employee of the respondents based onshore in the Far East. Logistical, training, rota management and similar support was provided by another company based in Scotland, with which the respondents had a contract. The tribunal found, taking account of the decision of the Court of Appeal in Lawson v Serco that it did not have jurisdiction; it determined that the claimant's place of employment was not within Great Britain as that was not where he carried out his work. On appeal, the Employment Appeal Tribunal, after having considered the decision of the House of Lords in Lawson v Serco, upheld the tribunal's finding of no jurisdiction.


 


THE HONOURABLE LADY SMITH

Introduction

1. The claimant sought to pursue a claim for unfair dismissal and the Employment Tribunal, sitting at Aberdeen, Chairman Mr R G Christie, sitting alone, determined that it did not have jurisdiction and dismissed the claim. The claimant was represented there by Mr Nicol, solicitor and before us by Ms McCrossan, solicitor. The respondents were represented there by Mr D N Yule, solicitor and before us by Mr Napier QC. I will refer to parties as claimant and respondents.

Background

2. The facts found by the tribunal do not appear to have been in dispute. They were, shortly put, that the claimant, who comes from Aberdeen and is a domiciled Scot, commenced working for the respondents' predecessors some years ago. His employment was transferred to the respondents in November 1999. Immediately prior to that, he had been employed by Northern Marine Management Ltd, a company whose main office was in Clydebank and which was a subsidiary of Stena Rederi AB, a large multinational company based in Sweden. He was dismissed from the respondents' employment in April 2003. Between 1998 and the date of his dismissal, he worked on an offshore drilling rig, the "Stena Clyde". The rig was, at all times, in Far Eastern waters, in Malaysia, Australia and Indonesia. The claimant lived at an address in Thailand from at least October 1999 until the date of his dismissal. He did not regard that as his permanent home. He returned to Scotland after he was dismissed. At no time did he work for the respondents in Great Britain. The "Stena Clyde" did not operate in UK waters nor could it have done so as its specifications did not meet North Sea requirements.
3. The respondents are a company which is registered in Singapore and has its only address there. It is a subsidiary of Stena Rederi AB. The respondents had a contract called a "Vessel Manning Agreement" with Swecal Ltd, also a subsidiary of Stena Rederi AB. Swecal's main office was in Clydebank. Swecal, accordingly, broadly put, provided all necessary support for the respondents' employees in terms of logistics, travel, rotas and suchlike. It also attended to recruitment, calculation of wages, the issuing of pay statements and similar matters. It is said that the only matter attended to by the respondents was the activation of the payment of wages. Wages were paid to the claimant by the respondents activating a bank transfer to Sweden and thereafter to his bank account. The claimant had no direct contact with the respondents.
4. The rig on which the claimant worked conducted drilling operations for another subsidiary of Stena Rederi AB, an Aberdeen based company, Stena Drilling Ltd. Decisions about the drilling operations of the rig were made by Stena Drilling in Aberdeen. The claimant's immediate superior on the rig was the Installation Manager. He was also an employee of the respondents. He reported to the Rig Manager, another employee of the respondents. The Rig Manager was based onshore in the Far East. According to the respondents' provision of further and better particulars, the decision to dismiss the claimant was taken by the Rig Manager. It would seem, therefore, that although parties were agreed that the respondents' activities were confined to the necessary activities associated with activating the payroll, so far as the claimant was concerned, he was subject to the immediate control and directions of the respondents through their employees, the Installation Manager and the Rig Manager.
5. There would not appear to have been any evidence as to where the base was for the rig on which the claimant worked. The tribunal make no findings regarding, for instance, any port to which it was taken between operations or for repairs or the place from which the claimant travelled to get to and from the rig.
6. The claimant's employment had been transferred to the respondents so that UK tax and national insurance liabilities did not arise from his employment.

The Tribunal's Decision

7. The tribunal took note of the fact that section 196 of the Employment Rights Act 1996 had been repealed and took account of and relied on the decision of the Court of Appeal in Lawson v Serco Ltd EAT0018/02. They referred, further, to the decision of this tribunal in Addison v Denholm Ship Management (UK) Ltd [1997] IRLR 389, but so as to distinguish it.
8. The tribunal noted that at no stage of his employment with the respondents did he perform any work in Great Britain. It asked itself the question: where was it that the claimant carried out his work? That, it was said (paragraph 33) would determine his place of employment. Paragraph 33 continues:

"In this case, it is inescapable that the place of employment was outside Great Britain and accordingly this applicant's employment was beyond the "legislative grasp" of the 1996 Act and on that basis this tribunal has no jurisdiction."

The Relevant Law

9. Section 94(1) of the Employment Rights Act 1996 ("the 1996 Act") provides that:

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

10. Nothing further is now said in the statute regarding the extent of the tribunal's territorial jurisdiction to entertain a claim in respect of unfair dismissal. Section 196 of the 1996 Act contained express provisions about jurisdiction to the effect that the tribunal's jurisdiction did not extend to cases where the employee was engaged in work wholly or mainly outside Great Britain if he did not ordinarily work in Great Britain under a contract of employment governed by the law of England and Wales or Scotland. That was, however, recognised by Parliament to be an unsatisfactory provision and its response was to repeal the section, leaving nothing in its place other than that the courts were left to imply any appropriate geographical limitations.
11. The territorial jurisdiction of the tribunal in an unfair dismissal case was considered in the case of Lawson v Serco Ltd. The Court of Appeal's decision in that case was relied on by the tribunal.
12. Lawson v Serco Ltd has, since this case was decided by the tribunal, made its way to the House of Lords, the decision of which is reported at [2006] IRLR 289. It was heard along with two other appeals which raised the question of the territorial scope of section 94(1) of the 1996 Act. It is a recent decision and, so far as I am aware, this is the first time its application has been considered by this tribunal. It is, accordingly, appropriate that its meaning and import be considered in a little more detail than if that were not the case.
13. Lord Hoffman, who gave the leading speech, explained the significance of the legislative history at paragraph 10 and 11. Having referred to the circumstances and the fact of the repeal of section 196, he stated:

"10. That does not mean, however, that the 1996 Act must be read as if the right not to be unfairly dismissed had been newly created without any guidance about its territorial application. There are in my opinion three ways in which the earlier history may be relevant.

11. First, the original exclusion of cases in which the employee 'ordinarily works outside Great Britain shows that when Parliament created the new remedy in 1971, it thought that the sole criterion delimiting its territorial scope should be the place where the employee worked. If he ordinarily worked in Great Britain, he should be entitled to protection. If not, then he should not. It attached no significance to such matters as the places where he was engaged, from which he was managed or his employer resided. The repeal of section 196 means that the courts are no longer rigidly confined to this single litmus test. Nevertheless, the importance which parliament attached to the place of work is a relevant historical fact which retains persuasive force."

14. Lord Hoffman referred further to the usefulness of the ideas and discussion contained in the cases on the application of the repealed section 196 and, further, to part of the relevant background being the effect of the Posting of Workers Directive (96/71/EC) where workers are posted to other member states which is, of course, not the position in the present case.
15. The difficult task for their Lordships was to identify precisely what test was to be taken as having replaced the old section 196 test for jurisdiction. The solution that had been proposed by Pill LJ in the Serco case, which was:

"The question is: what are the employments covered by the section? The answer, in our judgment, is straightforward though it may be difficult to apply in some cases: employment in Great Britain."

was complimented by Lord Hoffman as being "simple and elegant" but, equally, as one which had indeed proved difficult to apply in practice. He was concerned that such an approach involved formulating an ancillary rule of territorial scope by way of a verbal formula which itself would then require interpretation; that would run the risk of reading section 94(1) as though the words "employed in Great Britain" had been inserted into it when they had not. The task for the court was to interpret section 94(1) according to its actual provisions whilst recognising that it did not have world wide application.

16. Notwithstanding Lord Hoffman's reservations about Pill LJ's formulation, he stated, at paragraph 25:

"I am sure that Pill LJ was right in saying that what Parliament must have intended as the standard, normal or paradigm case of the application of section 94(1) was the employee who was working in Great Britain."

17. That what he has in mind is an employee who, as a matter of fact, works in Great Britain, irrespective of what his contract provides, is evident from the discussion that follows in paragraphs 26 and 27. It was, however, agreed by parties in the present case that, on no view could the claimant be regarded as actually having worked in Great Britain prior to his dismissal. He did not come within Lord Hoffman's standard, normal or paradigm case.
18. Lord Hoffman recognised that employees may not fall within the standard case yet may properly be regarded as being within the legislative grasp of section 194(1). He allowed though for only two other categories; one was the peripatetic employee and one was what he referred to as the "expatriate employee".
19. He considered the case of the peripatetic employee from paragraph 28. Commonsense dictated that the base of such an employee be treated as his place of employment. Lord Denning's approach in Todd v British Midland Airways Ltd [1978] IRLR 370 was approved as giving the most helpful guidance on the matter:

"A man's base is the place where he should be regarded as ordinarily working, even though he may spend days, weeks or months working overseas. I would only make this suggestion. I do not think that the terms of the contract help much in these cases. As a rule, there is no term in the contract about exactly where he is to work. You have to go by the conduct of the parties and the way they have been operating the contract. You have to find at the material time where the man is based."

20. Accordingly, if it can be said that an employee's base was, at the relevant time, somewhere in Great Britain, then the tribunal has jurisdiction. It is evident, therefore, that had the case of Carver v Saudi Arabian Airlines [1999] IRLR 370, where the claimant was a flight attendant who was based at Heathrow (and lived in London), been decided after the House of Lords decision in Serco, Lord Denning's test would have been satisfied and jurisdiction established.
21. One of the cases that was before their Lordships was the case of Crofts & Others v Veta Ltd and it having been established that the claimants in those cases, who were airline pilots, began and ended their tours of duty in London, reported to London to be "positioned" to the port from which their flying cycle was to commence and had what was considered to be the centre of their (i.e. the employees') operations in London, there was jurisdiction.
22. Lord Hoffman considered the case of the expatriate employee to be a "rather more difficult" problem (paragraph 35). At paragraphs 36 and 37, he stated:

"36. 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 I think there are some who do. I hesitate to describe such cases as coming within an exception or exceptions to the general rule because that suggests a definition more precise than can be imposed upon the many possible combinations of factors, some of which may be unforeseen. Mr Crow submitted that in principle the test was whether, despite the workplace being abroad, there are other relevant factors so powerful that the employment relationship has a closer connection with Great Britain than with the foreign country where the employee works. This may well be a correct description of the cases in which section 94(1) can exceptionally apply to an employee who works outside Great Britain, but like many accurate statements, it is framed in terms too general to be of practical help. I would also not wish to burden tribunals with inquiry into the systems of labour law of other countries. In my view one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have.

37. First, I think it would be very unlikely that someone working abroad would be within the scope of section 94(1) unless he was working for an employer based in Great Britain. But that would not be enough. Many companies based in Great Britain also carry on business in other countries and employment in those businesses will not attract British law merely on account of British ownership. The fact that the employee also 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 itself be sufficient to take the case out of the general rule that the place of employment is decisive. Something more is necessary."

23. Lord Hoffman then referred to two examples of cases where an expatriate employee could be regarded as working in Great Britain, one being where he is working as a representative of a business conducted in Britain, such as the foreign correspondent of a British newspaper, the other being where the employer has set up what amounts to an extra–territorial enclave, such as a military base abroad. He then added, at paragraph 41:

"I have given two examples of cases in which section 94(1) may apply to an expatriate employee:…..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."

24. Lord Hoffman also said, at paragraph 34, that he regarded the question of whether a case falls within the territorial scope of section 94(1) as question of law, evidently because he did not want to exclude the possibility of appeal. He added, however:

"On the other hand, it is a question of degree on which the decision of the primary fact-finder is entitled to considerable respect."

25. It seems, respectfully, that what we are to take from this is that section 94(1) must not be read as though it had the formula "working in Great Britain at the material time" inserted into it. It should, however, be remembered at all times that the place where an employee works can be regarded as having persuasive force when considering whether there is jurisdiction. In the standard case, the fact that an employee as a matter of fact works in Great Britain will be sufficient for jurisdiction. In the case of a peripatetic employee, the question of whether there is jurisdiction under section 94(1) falls to be answered by determining where it is that the employee is based. Thus there will not, it seems, be jurisdiction in the case of a peripatetic employee who works in Britain if his work base is elsewhere. Conversely, the fact that the peripatetic employee works mainly outside Britain will not prevent there being jurisdiction if it is established that his work base was in Great Britain, such as the claimants in the Veta cases. Finally, whilst jurisdiction may be established in the case of the expatriate employee, it seems that it is expected that the cases in which it arises will be less common and, importantly, that their Lordships expect the minimum though not, of itself sufficient, requirement to be that the employer is based in Great Britain.

Submissions for the Claimant on Appeal

26. Ms McCrossan submitted that the claimant was to be regarded as a peripatetic employee whose base was Great Britain. If he was not a peripatetic employee, he was an expatriate employee and jurisdiction should be found on that basis. If the House of Lords decision in Serco had been available to the tribunal, it would have found that it had jurisdiction.
27. By way of background, Ms McCrossan explained that there were a significant number of oil company employee cases in Aberdeen awaiting tribunal hearings that were presently sisted because of similar jurisdiction issues having arisen.
28. She submitted that although the relevant time for the purpose of determining jurisdiction was the time of dismissal, it was necessary to look at the whole employee relationship from its inception. The claimant had, until November 1999, been in the employment of a company that was based in Scotland. The respondents were really nothing more than a "postbox" in Singapore. The significant decisions about the operation of the rig were made by Stena Drilling, in Aberdeen. The rig on which the claimant worked could not be his operational base. That was a submission for which she relied on the cases of Addison v Denholm [1997] IRLR 38 and Todd v British Midland. Whilst she recognised that the fact that the claimant did not live in Scotland at the relevant time was a problem, he was a domiciled Scot and he returned to Scotland after he was dismissed.
29. Ultimately, the submission for the claimant seemed to be that since he was not based on the oil rig, since the respondents were but a "postbox", since he had originally been in the employment of a company based in Scotland and since the operations of the rig that he worked on were subject to directions from Stena Drilling in Aberdeen, jurisdiction followed. It would, it was submitted, defy sense to find that Singapore was the base because all that seemed to happen there was that wages were paid. Ms McCrossan's approach was clearly driven by a concern that no jurisdiction would be able to be established anywhere for the claimant if the employment tribunal in Great Britain did not have jurisdiction. He might fall into what was referred to as a "Flying Dutchman" category in the authorities. Regarding the suggestion that there might be jurisdiction in Malaysia, she indicated that that had not been established and that there was a concern about encouraging a system whereby the employer could, in effect, dictate where jurisdiction lay.

Submissions for the Respondents

30. For the respondents, Mr Napier submitted that the answer to the appeal lay in the understanding of the principles as to jurisdiction in claims of unfair dismissal that had been enunciated by Lord Hoffman in the Serco case. The present case fell within Lord Hoffman's "peripatetic worker" category. It was important to remember that the employee's case and the employer's base would not necessarily be the same. The claimant did not come within the "expatriate worker" category. "Base" submitted Mr Napier, meant "base for working purposes". The sort of matters that were relevant when answering it included questions of where the employee's headquarters were, where his travels in the course of his employment began and ended, where he lived or was expected to live, where he was paid and in what currency and whether he was paying national insurance contributions in Great Britain.
31. Mr Napier indicated that he did not suggest that the claimant's base was the rig on which he worked.
32. Mr Napier referred to the factual circumstances of the claimant's employment as I have already outlined them to have been. He observed that at no time during his period of employment with the respondents did the claimant work in Great Britain. That was a significant factor given Lord Hoffman's reference to the persuasive force of the location of the workplace. Whilst an oil rig worker who lives in the UK and goes offshore for periods of duty may be regarded as having his working base in Great Britain, this was not such a case. The claimant did not divide his time between the UK and the rig, he did not have a home within the UK, his employer did not a have a place of business in the UK and was not registered as a company in the UK. The Installation manager and the Rig Manager were based in the Far East and both were employees of the respondents. The fact that the respondents had links with companies operating in and from Scotland did not make that his base.
33. Nor, in Mr Napier's submission, was it to be assumed that the claimant would come within the worrying "Flying Dutchman" category referred to in the authorities, namely those employees for whom it seemed jurisdiction would never be established anywhere. The Malaysian authorities were deducting tax from his income and thus it was entirely possible that he would have the benefit of employment protection provisions there.
34. In summary, Mr Napier submitted that the tribunal had made a finding as to the absence of jurisdiction which should be upheld notwithstanding the different legal approach that had now been taken by the House of Lords.

Discussion and Conclusions

35. I am satisfied that, on the facts as found by the tribunal and taking account of the analysis of the applicable law by the House of Lords in Serco, to which I have already referred, it has not been established that the claimant's base was in Great Britain at the time of his dismissal. It is important to note, as Lord Denning commented in Todd, that it is necessary to find where the employee is based. I recognise that the place where the employee carries out the main, even the essential, part of his work may not be his base. But if that is so that will be because, on the evidence, his base is demonstrably elsewhere. The fact that his employer is directed from another jurisdiction does not show that that other jurisdiction is his base. The fact that his employer is related to companies in another jurisdiction does not make that other jurisdiction his base, either.
36. The facts of the present case fail to show any link between the claimant and Scotland other than that he is domiciled here. Neither Scotland nor any other part of Great Britain entered into the way in which the claimant's contract of employment was operated. It may well have figured as being the place from which whatever the contractual relationship between Stena Drilling and the respondents and Swecal and the respondents was, on one side, operated but that is not the point. The claimant cannot bring himself into the same category as, say, the pilots in the Veta case or the claimant in the Carver case (for whom, as I have indicated, a different result would, it seems, now have been produced). They could point to part of their work actually occurring within Great Britain because of the way that their employment worked in practice. Whilst in both cases, the parts carried out in Britain may have seemed small, they were a regular, established and significant feature of their work pattern that could properly be regarded as making Great Britain their base. Nothing comparable can be pointed to by the present claimant. In short, he points to the fact that co-subsidiaries of his employers which were involved in the operations of the rig on which he worked were based in Scotland. Bearing in mind all that Lord Hoffman has said by way of guidance on the matter, I cannot accept that that means that he was based there.
37. I should add that I do not accept that by refusing to recognise that there is jurisdiction in Great Britain, the claimant is consigned to the same fate as was the Flying Dutchman. There was no finding that there would be no jurisdiction elsewhere and, as Mr Napier submitted, there are at least indicators that there might be. It does not seem fair to regard the respondents as having had mere postbox status. They were an active and operating company. The tribunal made findings regarding their operation of the payroll which show that it was not a straightforward exercise. They employed persons to whom the claimant was answerable, who appear to have had power to dismiss the claimant and who must have owed the appropriate workplace duties to the claimant. Further, I am not satisfied that the last word has been said as regards the question of whether or not a person's place of work or his base can, for jurisdiction purposes, be on an oil rig or, at least at that oil rig's base. The first case relied on by Ms McCrossan, Addison, did not concern the jurisdiction of the tribunal under section 94(1). It concerned, principally, the question of whether a "flotel" could be the employees' place of work in the context of the Employment Appeal Tribunal seeking to identify the location of an undertaking for the purposes of TUPE; there could only be one such location and they were anxious to avoid the conclusion that there were in fact a number of undertakings according to where the flotel was based at any one time. For TUPE purposes, the location of the undertaking was to be regarded as the operational base of the flotels. They also found that the flotels could not be regarded as the employees' places of work for jurisdictional purposes. They thought it wrong to apply an "actual place of work" test (paragraph 40). However, as above noted, the decision of the House of Lords in Serco has rehabilitated the "actual place of work" test proposed by Lord Denning in Todd. Further, I note that one of the authorities taken account of by the Employment Appeal Tribunal en route to their conclusion in Addison was the case of Wilson v Maynard Shipbuilding Consultants AB [1977] IRLR 491 but the approach taken there has now also been disapproved of by their Lordships in Serco.
38. As regards the other case relied on by Ms McCrossan, Todd, I do not read what was said by Lord Denning as necessarily ruling out the possibility of an employee's base being an oil rig although he was clearly of the view that on the facts of the Wilson case, he would have been satisfied that that man's base was in Great Yarmouth where he left from and returned to, where he got his orders from and where his national insurance cards were assumed to have been kept. Much may depend on the facts and circumstances of the individual case, including any evidence as to the shore base for the rig itself, if there is one. I do not require to rule on the matter as the respondents did not require, for the purposes of their argument, to challenge the claimant's assertion that an oil rig could not the base for a peripatetic worker and did not submit the rig on which this claimant was his base. I would simply, at this stage, comment, as I have indicated, that it does not seem to me that the issue has been foreclosed by the existing authorities on the point although much would obviously depend on the precise facts and circumstances of the individual case.
39. Finally, I require to turn to the claimant's subsidiary argument that the claimant should, if not a peripatetic worker, be regarded as an expatriate worker. This argument does not, in my view, get off the ground given that the claimant's employers, the respondents are not registered in Great Britain and do not carry on business in Great Britain and nor was the claimant working abroad in what could be regarded as a British enclave. The circumstances do not, accordingly, fit with either of the two examples given by Lord Hoffman and they are so far divorced from them as to make it impossible to bring them within this category.

Disposal

40. In the foregoing circumstances, I will dismiss the appeal.