United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR IAN WRIGHT (of Counsel) (Bar Direct Access Scheme)
For the Respondent	MR DANIEL TATTON-BROWN (of Counsel) Instructed by: Kemp Little LLP Cheapside House 138 Cheapside London EC2V 6BJ

SUMMARY

JURISDICTIONAL POINTS – Working outside the jurisdiction

WORKING TIME REGULATIONS – Holiday pay

The approach to determining whether an employee of British company who works and lives abroad falls within the territorial scope of the Employment Rights Act 1996 section 94(1) has been developed since Lawson v Serco Ltd [2006] ICR 250. The question to be asked in the case of an employee who works wholly abroad is whether the connection with Great Britain and its employment law is stronger that that to the place where he performs all his work to overcome the general rule that the place of employment is decisive and is sufficiently strong to bring the employee within the scope of section 94(1). The connection with Great Britain and its employment law must be especially strong in the case of an employee who performs all his work and lives abroad. The test of whether when working abroad the employee is a representative of his British employer or is working in a branch office no longer of itself has the importance suggested in Serco. Ravat v Halliburton Manufacturing Services Ltd [2012] ICR 389, and Bates Van Winkelhof v Clyde and Co LLP [2012] IRLR 992 considered.

The test for the territorial scope of a claim under section 10 of the Employment Relations Act 1999 is the same as that for unfair dismissal. The principal basis for the decision of the Employment Judge that the Employment Tribunal did not have territorial jurisdiction to determine the Claimant's claims for unfair dismissal and for breach of section 10 of Employment Relations Act 1999 had been superseded after the hearing by the comparative and strong connection tests developed in cases since Serco. Appeal allowed.

Cross-appeal from the decision that the Working Time Regulations 1998 applied to an employee working outside the EU by reason of European law allowed. Claim for holiday pay under the Working Time Regulations 1998 dismissed.


 


THE HONOURABLE MRS JUSTICE SLADE DBE

1. Mr Dhunna appeals from the decision of an Employment Judge ('EJ') sent to the parties on 20 September 2011 that the Employment Tribunal ('ET') does not have territorial jurisdiction to hear his claims of unfair dismissal and breach of the right under the Employment Relations Act 1999 ('ERA 1999') section 10 to be accompanied at a disciplinary hearing. CreditSights Limited cross-appeals from the decision that the ET has territorial jurisdiction to hear his claim for accrued holiday pay under the Working Time Regulations 1998 ('WTR') Regulation 16(1). The parties will be referred to by their titles before the EJ as Claimant and Respondent. References below to paragraph numbers are to the judgment of the EJ unless otherwise indicated.
2. Whilst the Employment Rights Act 1996 ('ERA') and the ERA 1999 contain no statutory territorial limitations on the right to claim unfair dismissal under ERA section 94 and to be accompanied at a disciplinary hearing under ERA 1999 section 10, as was observed by Lord Hope in Ravat v Halliburton Manufacturing and Services Ltd [2012] ICR 389 paragraph 4 "it is plain that some limitation must be implied". That limitation has been developed in the authorities. It is agreed between the parties that the same territorial limitation applies to the claim for unfair dismissal and the right to be accompanied. References below to the territorial scope of ERA section 94(1) apply equally to that of section 10 ERA 1999. The principal issue on appeal is whether the EJ erred in concluding on the facts before him that the territorial limitation applied to exclude these claims. At the time of the hearing before the EJ, the most recent authority was the judgment of the House of Lords in Lawson v Serco Ltd [2006] ICR 250, as it was when the Notice of Appeal was drafted. Since then there has been further development in the authorities on this issue. These changes have meant that the arguments advanced by the parties on territorial limitation have necessarily been different in the Employment Appeal Tribunal ('EAT') from those advanced before the EJ. References below are to Great Britain and British employment law although references in the judgment of the EJ and in the authorities may on occasion have been to the United Kingdom and UK employment law.
3. The other grounds of appeal challenge certain findings of fact as unsupported by the evidence or given undue weight by the EJ.
4. As for territorial limitation on the claim for holiday pay, Regulation 1(2) WTR provides that the WTR extend to Great Britain only. The issue on the cross-appeal is whether the EJ erred in relying on European law and Bleuse v MBT Transport Ltd [2008] ICR 488 in concluding that the ET had jurisdiction to consider the Claimant's claim under the WTR for holiday pay.

Outline facts

5. The hearing before the EJ occupied four days. Four witnesses including the Claimant gave evidence and there were some 1100 pages of documents. I set out below an outline of the relevant facts as found by the EJ and uncontroversial evidence in the witness statements included in the appeal bundle. Notes of the oral evidence given had not been obtained.
6. The Claimant was employed by the Respondent from 23 January 2006 until his dismissal on 26 May 2010 as an Institutional Salesperson. The Respondent, which is based in London, is a subsidiary of CreditSights Inc. ('Inc') which is based in New York. The Respondent is a provider of independent investment research to institutional investors around the world. At the relevant time when the Claimant commenced his employment, the Respondent and Inc together employed a total of about 135 employees. The global coverage of the business was divided between the Respondent and Inc. The Respondent took responsibility for Europe and Inc for the United States and the Americas. The Respondent also had primary responsibility for Asia and the Middle East. The EJ held that Inc also had Asian accounts, managed directly from New York.
7. The only contract of employment given to the Claimant was that contained in a letter dated 13 December 2005 titled "Offer of Employment". The Claimant's place of work was stated to be an address in London or such other office within reasonable commuting distance. The letter was signed by Mr Peter Petas on behalf of the Respondent. A non-solicitation and non-competition agreement was also entered into on that date. It was governed by English law.
8. The EJ found that although at the commencement of his employment, his website profile described the Claimant as part of the CreditSights European sales team, as time went on he was keen to sell and market the CreditSights product to the Middle East, "and he wished to live in Dubai, partly at least because of the favourable tax regime there". He wanted a business development role solely in the Middle East and Africa. He did not want any legacy European accounts. The EJ held:

"He felt strongly that he would not be simply a sales person sitting in Dubai, but in a full on business development role with a long term view."

9. A decision was taken in New York to open a Dubai office. The opening was delayed for a year until October 2009 because of administrative difficulties. In anticipation of his move, the Claimant transferred his British and European clients to another employee in London and focused solely on sales to the Middle East, Asia and African clients. From January 2009 the Claimant was paid in US dollars rather than the former practice of having dollars converted into sterling.
10. It was decided that, from a legal point of view, the Dubai office would be a branch office of London. The branch office was considered as part of its parent company. Further, the EJ held that sales made in Dubai would be handled in London and that they would be invoiced from and payments remitted to London. The Claimant was the only employee of the Respondent working in Dubai.
11. From 1 January 2009, Ms Reena Mithal became the Claimant's line manager. She worked in New Delhi for a subsidiary of Inc. Ms Mithal continued to be the line manager of the Claimant when the Dubai office opened in October 2009 and he moved there. The EJ held:

"3.5. Basically, the CreditSights Group as a whole was managed from New York. For tax and financial accounting purposes, the financial results of both the Indian operation and the Respondent are consolidated with and into CreditSights Inc. Further, the setting of sales targets, sales categorisation, and sales tracking for the Asian and Middle Eastern business were and are still overseen by the New York office."

12. The EJ recorded that the Claimant gave evidence that he was supported by the Respondent's research, administration and sales staff. The Respondent's operations throughout his employment were supported by Inc. The initial support given to the Claimant by London was intended to be temporary only. The EJ held:

"It was planned to set up an office in Singapore, and this was ultimately done, which would be the hub for the Asian business and all administration would be carried out from there."

13. Ms Mithal stated that before the termination of his employment there had been on-going discussions with the Claimant about the prospect of him relocating to Singapore as CreditSights considered that this would be a better base for exploiting Middle Eastern and Asian sales opportunities than Dubai was proving to be. The Dubai office was closed. The Claimant did not move to Singapore as he was dismissed.

The Judgment of the EJ

14. The EJ noted that it was common ground that the judgment of the House of Lords in Serco applied to the determination of the territorial scope of the unfair dismissal claim. Mr Wright, counsel for the Claimant, did not criticise the analysis of Serco made by the EJ. The EJ noted that:

"Lord Hoffmann said that 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."

15. I will set out the contentions of the parties before the EJ as rightly and understandably the reasoning of the EJ in reaching his conclusions was directed by the submissions made to him.
16. Before the EJ, Mr Wright had relied upon the unreported case of Financial Times Ltd v Bishop [2003] UKEAT/0147/03/251. In that case it was said that the material question was whether Mr Bishop was selling advertising space in San Francisco as part of the business which the Financial Times conducted in London, or whether he was working for a business with which the Financial Times was associated in the United States. Mr Bishop was held to be within the scope of the unfair dismissal provisions. It was contended on behalf of the Claimant that by analogy with Bishop he fell within the territorial scope of ERA section 94 as he was selling subscription services on behalf of the Respondent. There was a substantial connection with the Great Britain.
17. Counsel then appearing for the Respondent submitted to the EJ that Bishop which pre-dated Serco was no longer good law.
18. The EJ recorded the key submissions made on behalf of the Claimant as follows:

"10. …The primary submission of the Claimant in respect of all claims is that the Tribunal has territorial jurisdiction because the Claimant falls within the first class of ex-patriate employees envisaged by Lord Hoffmann. He submits that he was working in Dubai for the purpose of maintaining and developing the business carried on by the Respondent in Great Britain. In other words, the Dubai office was a "representative office" for the Respondent's British business. The Claimant's secondary, alternative submission, is that if he does not fall within the first class of ex-patriate employees, then he has equally strong connections with Great British employment law to establish jurisdiction. These "equally strong connections" do not require any particular label to cover them but are supported by the evidence in this case. …The formalities for setting up the Dubai office reveal the establishment of a representative office, with the parent office being the Respondent. The documents and witness evidence point overwhelmingly to the conclusion that the Dubai operation was a representative office of the Respondent and not a branch of it conducting business abroad belonging to a British owner."

19. The EJ recorded the submissions made on behalf of the Respondent as follows:

"11. The Respondent contends that the Claimant does not fall within either of the two examples given by Lord Hoffmann of ex-patriate employees who might be able to bring a claim under Section 94 of the Employment Rights Act 1996. First, the Claimant was not an ex-patriate employee of a British employer who was operating within an extra territorial British enclosure. Secondly, he was not selling the Respondent's services "as part of the business which…it conducted in London". The mere oversight of not changing the employment contract when he permanently moved to Dubai does not bring him within the scope of section 94. The Respondent argues that the reality was that the Claimant was selling "CreditSights" services to Asian accounts which were not part of the Respondent's business in London. …It is argued that the Claimant's situation was analogous to the employee in San Francisco selling advertising space for a business which the Financial Times or an associated company was conducting in the United States. …The only involvement of the Respondent in the Asian business was to provide some administrative support, including the issuing of invoices and the signing of contracts. It follows, says the Respondent, that the Claimant was not a representative of a 'business conducted at home'. …The Claimant was not posted abroad for the purposes of a business carried on in Great Britain, and his move to Dubai was expected to be permanent."

20. In order to appreciate the extent to which the conclusion reached by the EJ on whether an ET had territorial jurisdiction to hear the claims depended upon the way in which the case was advanced before him, on Serco and upon facts the effect of which are challenged by the Claimant, it is necessary to set out more of the judgment than is usual. In reaching his conclusion the EJ held:

"12.1. The starting point is Lawson v Serco. The general rule is that it is very unlikely that someone working abroad would be within the scope of section 94(1), even if working for an employer based in the United Kingdom. Something more than that UK connection is necessary. Thus, even though the Claimant was technically (for administrative purposes) employed by Ltd, this would not be sufficient. He has to be able to show that he was working in Dubai for the purposes of Limited, in other words as a representative of a business conducted in the UK.

12.2. The Claimant contends that the Dubai operation was a representative office of the Respondent and not a branch office conducting business abroad belonging to a British owner. He places substantial reliance on the paperwork generated in setting up the Dubai office. However, I regard this as inconclusive. "Branch" and "Representative Office" are terms used interchangeably. The laws of Dubai meant that there was a significant limitation on what the Dubai office could do and how it could operate. Thus, another office – London for convenience – had to carry out his role. I have to look behind the technical set up on the Dubai office and the reasons for it, to the commercial reality of the situation.

12.3. At the date of his dismissal, the Claimant had relinquished all his European accounts (run from London) and was focusing entirely on Middle East, Asia and Africa, as the director of sales for these areas. He was line managed from Delhi, and had close links with that office and the line management of employees based there. What is fundamental to this case is that Ltd was only part of a worldwide business, which was ultimately run and managed by Inc in New York. The Dubai office and the Delhi office were part of the global operation, and had their own spheres of operation in the Middle East, Africa and Asia. Ltd in London focused on Europe. Inc in New York focused on the United States. The Claimant was not selling a product of Ltd as their representative. He was selling a global product for the international business. He did not report to London because he was not within Ltd's remit. He may have received assistance from specialist staff in London, but so did all sales staff wherever they were based.

12.4. The Claimant was on Ltd's payroll only as a matter of administrative convenience, consistent with it being the parent of a branch office. He was paid in US dollars. He was not entitled to be in Ltd's pension plan or under its health insurance scheme etc. Mr Adamson did not line manage the Claimant, and only signed contractual documentation generated by the office because he was the only convenient authorised signatory. The Claimant was in every sense that mattered part of the Asia operation, reporting to Ms Mithal in Delhi, line managing Delhi staff, and any revenue generated by him "counted" as part of the Asia business, not the business of Ltd. The key Mubadala account – the confidentiality agreement was signed by Inc., and the Claimant worked with colleagues in New York to try and finalise the consultancy services contract.

12.5. As Ms Mithal said, the international business of CreditSights defined their business by where of the sales and clients were located. All revenue ultimately went to New York. Had the Claimant not been dismissed he would undoubtedly have moved to Singapore from where a main office for the Asian business was to be established. He had effectively severed his links with the UK. In his own words to a colleague at the start of his period in Dubai, he had no intention of returning to the UK. There was no role for him to return to in any event. The decision to dismiss him was taken by Inc in New York. Thus, the circle was complete. Inc had set up the Dubai office, and they decided to close it, and Inc dismissed the Claimant. Ltd was not involved in these key decisions.

12.6. I therefore conclude that the Dubai office was not a representative office of the Respondent's UK Business (Ltd). The Claimant was not working as a representative of Ltd in Dubai. He was part of the Asian business of an international company, based in New York. He does not fall within the first class of ex-patriate employees identified by Lord Hoffmann in Lawson v Serco. Further, he did not have strong connections with the UK and British employment law such as would put him into the third, somewhat vaguely defined, category identified by Lord Hoffmann. The reality of the situation was that he had moved from the United Kingdom and severed his links with it. He was only on Ltd's payroll and received administrative support from it as a matter of convenience. Such could equally well have been provided by New York, and would have been provided by Singapore had the Claimant moved there. Thus, the Tribunal has no territorial jurisdiction to hear the claims of unfair dismissal and breach of the right to be accompanied to a disciplinary hearing."

21. Relying on Bleuse v MBT Transport Ltd [2008] ICR 488 and the Working time Directive 2003/88/EC the EJ held:

"12.7. …I have to modify the implied territorial limitation in regulation 1(2) of the Working Time Regulations, so as to ensure the enforcement by the Tribunal of the right to be paid for annual leave, as this derives from a Community Directive."

Submissions of the parties

22. Mr Wright for the Claimant contended that the EJ had relied on Serco in reaching his decision on whether the ET had territorial jurisdiction to hear the Claimant's unfair dismissal claim. After the hearing before him, the judgments of the House of Lords in Duncombe v Secretary of State for Children, Schools and Families (No. 2) [2011] ICR 1312 and Ravat v Halliburton Manufacturing and Services Ltd [2012] ICR 389 required a different approach. Applying the approach of Lord Hoffmann in Serco, the EJ had determined the issue before him on whether the Claimant fitted into one of the two exceptions to the general principle that it would be unusual for an employee who worked and was based abroad to come within the scope of section 94(1) or whether he fell within a third unidentified exception. That this approach is no longer to be adopted is shown in the judgment of Baroness Hale in Duncombe. It is no longer appropriate to try to fit the circumstances of a particular case into one of the examples given by Lord Hoffmann.
23. It was submitted that after Duncombe and Ravat the approach to be taken is to determine the issue of jurisdiction by deciding whether the Claimant's employment has stronger connections with Great Britain and with British employment law than with any other system of law. Mr Wright contended that if the EJ had based his decision on the factors set out by Baroness Hale at paragraph 16 of Duncombe, he should have concluded that the Claimant's employment had an overwhelming connection with Great Britain and British employment law. He submitted that the Claimant satisfied the two most important factors identified by Baroness Hale. He was employed under a contract governed by English law and, although he was not employed in an international enclave, he had no particular connection with Dubai where he worked.
24. Mr Wright contended that Mr Sigworth did not pay sufficient regard to these factors or to the first factor identified by Baroness Hale, that the Claimant's employer was based in Britain. Further, it was said that the EJ did not weigh up the aggregate of facts in reaching his decision. These included that the Subscription Agreement entered into with customers was governed by English law, the transactions entered into were subject to FSA regulation, all invoices went through the Respondent and were signed by it. The contract of employment entered into by the Claimant, including the restrictive covenants, was not redrafted when he moved to Dubai. The Respondent relied on the restraints in the contract when terminating the Claimant's employment. Mr Wright submitted that these factors and those which he relied upon before the EJ which were set out in paragraph 10 of the judgment should have led to the conclusion that the ET had territorial jurisdiction to determine the Claimant's unfair dismissal claim.
25. Mr Wright contended that the facts relied upon by the Respondent which are set out in paragraph 11 of the judgment are insufficient to support the conclusion of the EJ. The finding of the EJ in paragraph 11 that:

"The Claimant was in every sense that mattered part of the Asian operation."

failed to have regard to the fact that the New Delhi office did not engage in trading activities. Junior people were working there who assisted with research. The Respondent's spreadsheets showed that the business conducted from Dubai was included in the revenue and expenditure figures for the Respondent, although shown separately. It was the Respondent which reimbursed the Claimant's expenses in Dubai. The Respondent decided the Claimant would go to work in Dubai.

26. Mr Wright contended that the relevant facts were in many respects analogous to those considered in Ravat. Mr Ravat was employed by an associated company of a United States Corporation. It was said that the EJ did not "concentrate on" the fact that the Claimant was employed by a British based company as was Mr Ravat. Mr Ravat's case had some foreign elements but that was not held to deprive the ET of jurisdiction to hear his unfair dismissal claim.
27. Mr Wright also contended that, as in Bishop, on a correct view of the facts, the Claimant had been working in Dubai for a British business.
28. Mr Wright submitted that the EJ erred in failing to apply the guiding principle of giving effect to what Parliament may reasonably have intended to be the territorial scope of section 94(1) as now explained in Duncombe and Ravat. He therefore erred in failing to conclude that the claim for unfair dismissal brought by the Claimant was within the jurisdiction of the ET.
29. Mr Wright fairly recognised that the other grounds of appeal were more difficult to advance. He helpfully pared down and considered Grounds 2 to 4 together in numerical order. He contended that the EJ erred:

(i). in holding that the "set up in Dubai was technical or simply a matter of convenience". The evidence did not support such a conclusion. Further the EJ erred in failing to have regard to the "technical set up" which pointed to a strong connection with Great Britain;

(ii). in regarding the fact that at the date of his dismissal the Claimant was focussing on non-European accounts. This was the case when he was working in London. Further, all the business obtained by the Claimant was processed through London;

(iii). in holding that the Claimant was not selling a product of the Respondent but that of an international business. All the Claimant's sales were processed through the Respondent. Apart from moving his desk from London to Dubai nothing of significance changed regarding the product sold;

(iv). in holding that the Claimant was part of the Asian business;

(v). and (vi). in holding that the Claimant had severed his links with Great Britain when he moved to Dubai. Had the Claimant not been dismissed he would have returned to Great Britain. Had he moved to Singapore he would have been given a new contract as it was anticipated that, unlike New Delhi, the office in Singapore would have been a base for a trading business;

(vii). in relying on the decision to dismiss being taken in New York. The Claimant was dismissed because of the belief that he had been in breach of his contract of employment with the Respondent.

Further, Mr Wright challenged the finding of fact by the EJ that the Claimant was not in the Respondent's health care scheme.

30. Whilst not conceding the point raised in the Cross-Appeal, Mr Wright quite properly recognised that Bleuse was distinguishable from the Claimant's case. Mr Bleuse was held to be within the scope of the WTR. He worked in mainland Europe whereas the Claimant was not working in Europe.
31. Mr Tatton-Brown for the Respondent pointed out that in his Notice of Appeal the Claimant accepted that the EJ correctly identified the legal starting point for his decision as the judgment of Lord Hoffmann in Serco. It was not argued in the Notice of Appeal that the EJ erred by not applying Duncombe. However, fairly and appropriately, Mr Tatton-Brown agreed that the absence of reference in the Notice of Appeal to the new authorities decided after Serco did not prejudice anyone.
32. It was submitted that the critical finding made by the EJ was that the Claimant did not fall within the third category of employee who are the exception to the general rule that the place of employment is decisive in determining whether an ET has territorial jurisdiction to hear a claim for unfair dismissal. The EJ held that the Claimant:

"…did not have strong connections with the UK and British employment law, such as would put him in the third, somewhat vaguely defined, category identified by Lord Hoffmann [in Serco]."

33. Mr Tatton-Brown submitted that if the focus required in determining whether a Claimant was within the scope of section 94 was the employment relationship with his employer, the EJ was entitled to focus on what the Claimant was doing when he was carrying out his work. The facts set out in paragraphs 12.3 and 12.4 relied upon by the EJ fully supported his conclusion. Mr Tatton-Brown also drew attention to paragraph 17 of Ms Mithal's witness statement in which she said that when she moved to New Delhi in January 2009 she became the Claimant's line manager. Further, in paragraph 25 she stated that the Dubai office was regarded by management as part of the Asian business. She asserted that for management and forecasting purposes, all costs associated with the Claimant and the Dubai office were considered attributable to the Asian business.
34. It was contended that the evidence before the EJ justified the key findings made by him. On those findings the exceptional circumstances required to give an ET jurisdiction to hear the unfair dismissal claim made by the Claimant who worked wholly in Dubai were not made out.
35. The focus of the argument before the EJ was whether the Claimant's circumstances were within one of the categories identified by Lord Hoffmann as falling within the exceptions to the general rule that the ET did not have jurisdiction to determine unfair dismissal claims of employees working abroad. The facts found did not justify the conclusion that the requisite strong connection between the Claimant's employment and the Great Britain was made out.
36. Mr Tatton-Brown emphasised that "considerable respect" must be accorded to the decision of the ET by an appellate court. Both Serco and Ravat refer to this. It was submitted that what this means in practice is that so long as the decision of the ET is within the bounds of reasonable judgment it should not be interfered with even if another tribunal could reasonably have reached a different conclusion or the appellate court itself may have done so.
37. In order to emphasise that considerable respect is to be given to the decision of the ET, Mr Tatton-Brown referred to a citation from Duncombe in paragraph 93 of the judgment of Elias LJ in Bates Van Winkelhof v Clyde and Co LLP [2012] IRLR 992 in which Lord Hope observed that:

"28. …It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive."

Mr Tatton-Brown distinguished Ravat from the Claimant's case. Mr Ravat lived in Great Britain and commuted to his work abroad. He had been assured that he would be given the protection of British employment law. Those factors had to be weighed against the fact that Mr Ravat had been working in Libya for the benefit of an associated German company and the decision to dismiss him was taken in Cairo. The employer's appeal from the decision that the ET had jurisdiction to determine Mr Ravat's claim was dismissed.

38. Mr Tatton-Brown submitted that the EJ made key findings of fact which are not challenged as perverse. The Claimant's case is to be distinguished on the facts from that of Ravat. Those facts support the conclusion that the ET does not have territorial jurisdiction to hear his claim of unfair dismissal. The EJ held in paragraph 12.6 that the Dubai office was not a representative office of the Respondent. The Claimant was working as part of the Asian business of an international company based in New York. The EJ held that the Claimant did not have strong connections with the Great Britain and British employment law. The reality of the situation was that he had moved from Great Britain and severed his links with it.
39. As for the other grounds of appeal which had been "pared down" by Mr Wright, Mr Tatton-Brown submitted that the judgments in Serco and Ravat emphasise that "considerable respect" should be given to the decision of the EJ. Dealing with them using the numbering adopted by Mr Wright, Mr Tatton-Brown submitted:

(i). the finding is supported by paragraphs 50 to 54 of the statement of Ms Mithal;

(ii). and (iii). there was ample evidence to support the findings of fact referred to;

(iv). there was evidence to support the conclusion that the Claimant was part of the Asia business;

(v). and (vi). there was evidence before the EJ to establish that the Claimant had severed his links with Great Britain;

(vii). the contention is correct but not material. Mr Good was acting with the authority of the American directors of the Respondent to terminate the Claimant's contract of employment with the Respondent.

Even if the EJ erred in holding that the Claimant was not entitled to be in the Respondent's health insurance scheme, the finding is relatively trivial in the context of the judgment as a whole.

40. In summary, Mr Tatton-Brown submitted that on the findings of fact the EJ did not err in concluding that the Claimant had not shown that "something more" to establish that, notwithstanding he was working in Dubai, he was within the territorial scope of the unfair dismissal provisions. The appeal should be dismissed.
41. As for the Cross-Appeal, Mr Tatton-Brown contended that the effect of Bleuse is that an English court must seek to give effect to directly effective provisions of a Community Directive by construing the relevant domestic statute, if possible, in a way which is compatible with the Directive. It was submitted that this principle does not confer jurisdiction in respect of the Claimant's claim for holiday pay as the Claimant was working and based in Dubai which is not a member State of the European Union. There is no directly effective right derived from a Community Directive which purports to confer the right to receive holiday pay on those employed outside the European Union. Accordingly the EJ erred in law in relying on European Law and Bleuse to hold that the ET had jurisdiction to determine the claim made by the Claimant for holiday pay.

Discussion and conclusion

42. ERA section 94(1) which confers the right to claim unfair dismissal contains no express territorial restriction on those who can claim that right. As in Bates Van Winkelhof, at the time of the hearing before the EJ the leading authority was Serco. Since then the House of Lords considered the territorial scope of section 94(1) in Duncombe and Ravat and the Court of Appeal in Bates Van Winkelhof. The fundamental principles applicable to the issue have remained unchanged. It is the approach to the exceptions to the general rule that the right to claim unfair dismissal will only exceptionally cover employees who are working or based abroad which have been developed.
43. The general principles to be derived from the authorities include:

(1) The question of territorial scope is always a question of statutory construction. "Who, it is to be asked, is within the legislative grasp, or intendment, of the statute under consideration" (Serco, Lord Hoffmann para 6, Bates Van Winkelhof para 77);

(2) 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 (Serco Lord Hoffmann para 25, Ravat Lord Hope para 26);

(3) The general rule is that the place of employment is decisive in determining the territorial reach of section 94(1) but its open-ended language leaves room for some exceptions where the connection of the employee with Great Britain is sufficiently strong to show that this can be justified (Ravat Lord Hope para 27);

(4) The question of whether, on given facts, a case falls within the territorial scope of section 94(1) should be treated as a question of law. Whether the connection between the circumstances of the employment and Great Britain and its employment law was sufficiently strong is a question of fact and degree on which the decision of the primary fact-finder is entitled to considerable respect (Serco Lord Hoffmann para 34, Ravat Lord Hope para 35).

44. The principles to be applied when deciding whether an employee who works abroad is within the scope of section 94(1) have developed since Serco. In Serco Lord Hoffmann at paragraph 37 held that 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. Something more is necessary. He held that 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 in a branch of a British business but as representative of a business conducted at home. Lord Hoffmann referred to the judgment of the EAT in Bishop and observed:

"The question was whether Mr Bishop was selling advertising space in San Francisco as part of the business which the 'Financial Times' conducted in London or whether he was working for a business which the 'Financial Times' or an associated company was conducted in the United States…"

After referring to the second exception to the general rule of an expatriate employee working in an extra-territorial British enclave Lord Hoffmann left open the possibility that there may be other exceptions.

45. Baroness Hale in Duncombe emphasised that the examples given by Lord Hoffmann are simply that. It is the general principle that is of importance and should be applied. Baroness Hale held at paragraph 8:

"It is therefore clear that the right will only exceptionally cover employees who are working or based abroad. The principle appears to be that the employment must have much stronger connections both with Great Britain and with British employment law than with any other system of law. There is no hard or fast rule and it is a mistake to try and to use the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle."

46. Lord Hope in Ravat explained at paragraph 28 that the reason why an exception to the general rule that the place of employment is decisive can be made in certain cases:

"…is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that although they were working abroad, Parliament must have intended that section 94(1) should apply to them. The expatriate cases that Lord Hoffmann identified as falling within its scope were referred to by him as exceptional cases: para 36. This was because, as he said in para 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. It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive. The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them."

47. Lord Hope in Ravat made it clear that where a Claimant lives is relevant to the comparative enquiry as to whether the employment relationship has a stronger connection with Great Britain than with the foreign country where the employee works. He held in paragraph 28 that:

"The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them."

Lord Hope rejected the submission of counsel for the employer that the fact that the Claimant's home was in Great Britain was of no relevance.

48. Mr Ravat had his home in Great Britain and commuted to work in Libya. Lord Hope held of such circumstances:

"29. But it does not follow that the connection that must be shown in the case of those who are not truly expatriate, because they were not both working and living overseas, must achieve the high standard that would enable one to say that their case was exceptional… The question of fact is whether the connection between the circumstances of their 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."

49. The approach to determining whether the unfair dismissal provisions of ERA apply to an employee working abroad were refined further in Bates Van Winkelhof. Elias LJ explained in paragraph 98 that the comparative enquiry developed by Baroness Hale in Duncombe and Lord Hope in Ravat that for territorial jurisdiction to bring an unfair dismissal claim to be established, the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works is not necessary:

"Where the applicant lives and/or works for at least part of the time in Great Britain. The territorial attraction is then far from being all one way and the circumstances need not be truly exceptional before the connection with the system of law in Great Britain can be identified. All that is required is that the tribunal should satisfy itself that the connection is, to use Lord Hope's words:

'...sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to deal with the claim.'"

50. Thus the principles derived from the authorities to be applied when considering whether an employee who works and lives abroad falls within the territorial scope of ERA section 94(1) are that:

(1) the overarching question is whether Parliament intended that ERA section 94(1) apply to a person in the circumstances of the Claimant;

(2) the general rule is that the place of employment is decisive; but

(3) where the employment has much stronger connections both with Great Britain and with British employment law than with any other system of law the Claimant will be within the scope of section 94(1) if the connection is sufficiently strong;

(4) the comparative exercise is appropriate where the Claimant is employed wholly abroad. As suggested in paragraph 98 of Bates Van Winkelhof, the comparison is between Great Britain and the jurisdiction in which the Claimant works;

(5) the country in which the Claimant lives is relevant. If he lives as well as works abroad an especially strong connection with Great Britain and British employment law is required before an exception can be made for him;

(6) when the Claimant lives and/or works for at least part of the time in Great Britain, the comparison of connections with Great Britain and with the country in which he works is not required. All that is required is a sufficiently strong connection to enable it to be said that Parliament would have regarded it appropriate for an ET to deal with the Claimant's unfair dismissal claim.

51. In cases in which an employee is employed wholly abroad and lives abroad, in my judgment it may not be sufficient to establish in a comparative exercise that his employment has much stronger links with Great Britain and with British employment law than with that of the jurisdiction where he works. Having regard to the overarching principle to be applied, it is also necessary to show that those links are sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the ET to deal with the employee's unfair dismissal claim. This may be relevant where a Claimant who works and lives abroad has stronger links with Great Britain and British employment law than with the country in which he works but has links with a third country. Although another comparative exercise may not have to be entered into, ties with the third country may diminish the employee's ties with Great Britain and British employment law so that they are insufficiently strong to support the proposition that Parliament must have intended section 94(1) to apply to him.
52. At the time of the hearing before the EJ the judgment of the House of Lords in Serco was the authority for lower courts to apply when considering the issue of whether an individual was within the territorial scope of section 94(1). For those working abroad for an employer based in Great Britain something more had to be shown to bring him within the scope of section 94(1). One of the examples of "something more" in Serco was that the employee was working abroad for the purposes of a British employer as a representative of rather than in a branch of a business conducted in Great Britain. At the hearing, understandably the parties and the EJ therefore gave considerable weight to the issue of whether the Claimant was working in Dubai for the purposes of the Respondent, a British company, as a representative.
53. The cornerstone of the reasoning of the EJ on whether the Claimant was within the scope of section 94(1) is set out in paragraph 12.1. The EJ referred to Serco and an exception that the Claimant:

"has to be able to show that he was working in Dubai for the purposes of Limited, in other words as a representative of a business conducted in the UK."

Having set out the facts on which he based his decision, the EJ concluded in paragraph 12.6:

"…the Dubai office was not a representative office of the Respondent's UK Business (Ltd). The Claimant was not working as a representative of Ltd in Dubai. He was part of the Asian business of an international company, based in New York. He does not fall within the first class of ex-patriate employees identified by Lord Hoffmann in Lawson v Serco."

54. The EJ went on to hold that the Claimant did not have strong connections with Great Britain and British employment law:

"…such as would put him into the third, somewhat vaguely defined, category identified by Lord Hoffmann. The reality of the situation was that he had moved from the United Kingdom and severed his linked with it. He was only on Ltd's payroll and received administrative support from it as a matter of convenience."

55. It is this second basis for the decision of the EJ which is closer to the approach adopted in the authorities decided after Serco to the issue of whether "truly expatriate" employees who not only work but live abroad are within the scope of section 94(1). Lord Hope in Ravat considered such cases in paragraph 28 of the judgment. Paragraph 29 concerns the case of those who, like Mr Ravat, are not truly expatriates. In paragraph 28 Lord Hope referred to the comparative exercise of whether the connection of the employee with Great Britain was sufficiently strong to overcome the general rule that the place of employment is decisive. An especially strong connection with Great Britain is required before an exception to that general rule can be made. As Elias LJ held in Bates Van Winkelhof paragraph 98, the comparative exercise is appropriate where an employee, such as the Claimant, is employed wholly abroad. He observed that:

"Some comparison and evaluation of the connections between the two systems will typically be required to demonstrate why the displacing factors set up a sufficiently strong counter-force."

56. Whilst the EJ gave some consideration to the strength of the connections of the Claimant with Great Britain and British employment law, understandably because the main focus of his decision was on whether the operation in Dubai where the Claimant worked was a branch or a representative office of the Respondent, he did not compare such connections with the strength of the connections the Claimant had with Dubai to the extent now required by the authorities decided since Serco. The overarching question to be answered is whether Parliament is to be presumed to intend an employee in the circumstances of the Claimant to be within the scope of section 94(1). I have considered whether, as in Bates Van Winkelhof, there can be confidence that had the EJ approached the issue of whether the Claimant was within the jurisdictional scope of section 94(1) in accordance with the authorities decided since Serco on the facts found by him he would have come to the same conclusion. Many of those facts would support the conclusion that the Claimant was not within the territorial scope of section 94(1). However, the question of the relative strength of connection of an expatriate employee with Great Britain and with the country in which he works and, if the connection with Great Britain is the greater, whether it is sufficient to bring the Claimant within the territorial scope of section 94(1) is one of degree. Whilst respect must be paid to the fact finding Tribunal, in this case the EJ viewed the facts in the light of the guidance in Serco. The guidance has been developed in subsequent authorities. In my judgment it cannot be said with the degree of confidence required to uphold the decision of the EJ, that the outcome would be the same notwithstanding that the test to be applied in determining whether the Claimant is within the territorial scope of section 94(1) requires a different enquiry than that which was undertaken by him. Further findings of fact may be necessary and a different emphasis may be given to the relevant facts.
57. In light of this conclusion it is not necessary to consider the factual challenges made in Grounds 2 to 4 of the Notice of Appeal.
58. Regulation 1(2) of the WTR provides that they extend to Great Britain only. The EJ held that he had:

"to modify the implied territorial limitation in regulation 1(2)…so as to ensure the enforcement by the Tribunal of the right to be paid for annual leave, as this derives from a Community Directive".

He accepted that "the holiday pay claim is different" from the territorial restraint on the claim for unfair dismissal "because of the European law influence" as indicated in the case of Bleuse.

59. The EJ erred in holding that the WTR contain an "implied" territorial limitation. Regulation 1(2) contains a clear express territorial limitation. The WTR extend to Great Britain only. They expressly did not apply to Dubai.
60. The EJ did not identify any provision in the Working Time Directive, 2003/88/EC which states that it applies to employees working outside the EU. Nor did the EJ identify any provision of EU law which would lead to the Directive having that effect. Bleuse was concerned with an employee working in the European Union.

Conclusion

61. The appeal is allowed and the complaint remitted for rehearing. There is an issue between the parties as to whether the complaint should be remitted to the original EJ. The advantage of possible saving of costs in remitting to the same EJ because he had heard and considered evidence are outweighed by disadvantages. The hearing before the EJ started more than two years ago. Even with a good note, he is unlikely to have a detailed recollection of the evidence. Evidence which was not before him may be adduced. Challenges to certain findings of fact were made which it has been unnecessary to determine in this appeal but which may be considered at a remitted hearing. On a rehearing, an EJ will consider all the evidence in accordance with authorities decided after the original hearing and this judgment. This will require a different approach from that previously adopted. Without questioning his professionalism, the original EJ may or may be perceived to have difficulty in departing from his original findings and conclusions.

The complaint is remitted to a different Employment Judge to determine whether an Employment Tribunal has territorial jurisdiction to hear the Claimant's claims of unfair dismissal and breach of the right under section 10 of the ERA 1999 to be accompanied at disciplinary hearing.

62. The cross-appeal is allowed and the claim for accrued holiday pay dismissed.