LEGAL CORNER: American employee not entitled to rely on UK law

26th Sep 2014

The Employment Appeal tribunal recently grappled with the difficult issue of the geographical reach of British employment law in the case of Fuller v United Healthcare Services Inc UKEAT/0464/13.

Mr Fuller was an American citizen employed by an American company; he initially held a position based in America which required him to travel overseas on a regular basis. However, a year into his employment, he was offered a position as managing director of a newly created subsidiary whose focus was to develop a UK and European business. Although his contract stated that he would be ‘based’ in America, he was required to spend approximately half of his time in the UK, with the remainder of his time split between other countries and America. He continued to receive his pay in US dollars, and his bonus entitlement, paid time off and holidays were provided in line with US policy, including local statutory public holidays applicable in the US.

However, a year into his new role, Mr Fuller received an unexpected telephone call from his employer stating that due to ‘budget issues’ his assignment to the UK was being terminated and if he was unable to find an alternative role within the business his employment would also come to an end. Mr Fuller therefore brought claims in the employment tribunal for unfair dismissal and also discrimination on the grounds of sexual orientation. He argued that his dismissal had been motivated by the fact that he was homosexual.

His employer argued at a preliminary hearing that Mr Fuller could not pursue his claims as the employment tribunal did not have jurisdiction to hear them since he was employed by an American company and based in the US. The employment judge noted that both the Employment Rights Act 1996 and the Equality Act 2010 were silent on the territorial reach of the legislation. The question was therefore whether Parliament could be presumed to have intended an employee to fall within the legislative grasp of the statutory provisions in question, notwithstanding foreign elements in the case.

In this instance, the judge found that Mr Fuller had initially been employed by an American company to work in the US. Did his new position constitute a break with the substantive nature of his old role? The judge found that it did not since his contract still stated that he was required to be based in America, he was still paid in US dollars, and he was still entitled to benefits, such as holidays, which were in line with US law. He still maintained his home in America, living in accommodation rented by his employer whilst in the UK. The judge therefore found that there was an insufficiently strong connection with the UK and UK employment law to enable it to be said that Parliament would have intended Mr Fuller to have the right to present an unfair dismissal complaint to an Employment Tribunal in the UK.

It was clear from the evidence that the strongest connection, both in the deliberate intention of both parties to the employment relationship, as contractually expressed, and in the factual workings of that contract, was to the US. The claim was therefore dismissed.

Mr Fuller appealed to the Employment Appeal Tribunal but his appeal failed, on the basis that the employment judge’s reasoning for dismissing the case was sound. The appellate court accepted that it might be considered to be odd that a person working in this country did not have the protection of discrimination laws applicable to those who might work in the same office as him, and that it was arguable that an employer who required his employees to spend considerable time working in Britain should thereby be subject to legislation enacted by the British Parliament. However, on the facts of this case, it could not be said that Mr Fuller’s employment relationship with his American employer had a strong relationship with the UK and UK employment law.

This case emphasises the fact sensitive nature of decisions on the territorial reach of UK employment law. If Mr Fuller had a closer connection to the UK, for example if he had relocated his home to this country, or if he had been required to spend more time here, then this may have altered the decision. Ultimately it is a question of fact and degree.

Safia Tharoo, Barrister, 42 Bedford Row

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