Today we shall consider the Employment Appeal Tribunal’s decision in Dhunna v CreditSights Ltd, addressing the territorial scope of unfair dismissal, the right to be accompanied at hearings and holiday pay claims. In doing so, we shall examine the following:
- What were the facts in Dhunna v CreditSights Ltd?
- What is the relevant law surrounding the case?
- Why did the Employment Appeal Tribunal reach this decision?
- Why is this case significant?
What were the facts in Dhunna v CreditSights Ltd?
Mr Dhunna (‘the Claimant’) was employed as an Institutional Salesperson by CreditSights Ltd (‘the Respondent’) from 23 January 2006. The Respondent is based in London and is a subsidiary of CreditSights Inc. based in New York. The Respondent is a provider of independent investment research to institutional investors around the world and is responsible for operations in Europe, Asia and the Middle East. The Claimant’s contract of employment was dated 13 December 2005 with the place of work addressed in London. In October 2009, the Claimant moved to a new Dubai office and transferred all his European clients to another employee. Sales made in Dubai were invoiced from London. The Dubai office closed to make way for an office in Singapore to orchestrate operations in Asia and the Middle East. Moving to Singapore was discussed with the Claimant, who did not move and was dismissed on 26 May 2010. The Employment Tribunal found the Claimant sold a global product in Dubai, was not representing London specifically and was on London’s payroll for administrative purposes only. Ultimately, the Employment Tribunal held all the revenue went to New York and the Claimant had severed all links with the UK. Therefore, the Employment Tribunal did not have the territorial jurisdiction to hear the claims of unfair dismissal and breach of the right to be accompanied to a disciplinary hearing. The Claimant appealed this decision and the Respondent cross-appealed the decision to hear a claim for holiday pay.
What is the relevant law surrounding the case?
An employee under employment law is entitled to:
- The right not to be unfairly dismissed under the Employment Rights Act 1996 section 94.
- The right to be accompanied at a disciplinary hearing under the Employment Relations Act 1999 section 10.
- The right to be paid annual leave under the Working Time Regulations 1998 regulation 16.
Why did the Employment Appeal Tribunal reach this decision?
The Employment Appeal Tribunal allowed the Claimant’s appeal and remitted the claim back to the Employment Tribunal. It was agreed unfair dismissal and the right to be accompanied fell under the same territorial limitation. Originally, the Employment Tribunal relied on Lord Hoffmann’s judgement in Lawson v Serco Ltd and could not find a strong enough connection for the Claimant’s business to be representative of the British business. However, following subsequent developments in Duncombe v Secretary of State for Children, Schools and Families (No. 2) and Ravat v Halliburton Manufacturing and Services Ltd, the Claimant must now prove that stronger connections exist with Great Britain than the country in which the Claimant operates. The Employment Appeal Tribunal found that whilst the Employment Tribunal had considered the strength of the Claimant’s connections with Great Britain, these connections were not compared to those of Dubai. It was held that on the current facts, it was unlikely that the connections to Great Britain would be stronger. However, this decision could not be made in confidence without a reconsideration of the facts. The cross-appeal was also allowed and the claim for holiday pay dismissed. The Employment Appeal Tribunal concisely held that the legislation expressly limited the regulations to Great Britain only.
Why is this case significant?
This case is significant because it has forced parties to change the way in which they present evidence at tribunals to establish whether they fall within the jurisdiction of British Employment Law. The question is now a comparative exercise of where the strength of the connections lies, instead of whether or not the employee worked as a branch or representative of the company subject to British Employment Law. Furthermore, it expressly denies any possible extension of holiday pay to employees working abroad by reaffirming the Working Time Regulations expressly apply to Great Britain only. This is a classic case of redefining the test to produce the same outcome. Despite technical advancements in the law, the outcome for employees will probably remain the same. Lord Hoffmann’s judgement in Serco remains true, that it is very unlikely for someone working and living abroad to be within the scope of unfair dismissal. The best advice for employees is to maintain as many connections with Great Britain as possible to be subject to British Employment Law, Lord Hope did not rule out the connection of having a home in Great Britain. For employers, the best advice is to sever all ties connecting the British employer to the employee. If it is essential or more convenient to retain operations then produce comparative evidence to show this. For example, yes the employee was listed on the payroll in Great Britain. However, the employee was paid in a foreign currency into a foreign account and made all payroll inquiries to a manager based in a foreign office.