The latest case on the territorial scope of UK employment law offers an opportunity to examine the correct approach in terms of a 2006 House of Lords case on which doubt has since been cast

The litigious area of the territorial scope of British employment legislation continues to generate case law. Each of the recent cases has justified analysis. I have provided such analysis for the Journal here, here and, most recently, here. 

Hamam v British Embassy in Cairo [2020] UKEAT 123/19/2401 is no different, but it involves a journey down what we might regard as memory lane, and raises more systemic issues with the area of law.

Memory lane

(i) Lawson v Serco: general

By memory lane, I mean a venture back to Lord Hoffmann’s judgment in Lawson v Serco [2006] UKHL 3. The headline significance of Lawson is that Lord Hoffmann set out three categories of employees who he, on behalf of the Appellate Committee, regarded as capable of being within the territorial scope of the Employment Rights Act 1996 (“ERA”). These were:

  1. the “standard” case: an employee who can be said to be working in Great Britain at the time of their dismissal;
  2. the “peripatetic” employee: one who is “based” in Great Britain despite working overseas for much of the time;
  3. the “expatriate” employee: one who works and is based (i.e. resident) overseas.

I will return, later, to the issues about the significance of Lawson in light of the subsequent case law. For now, it is sufficient to note that that case law complicates matters. The analysis relevant here is best served, initially, with a simpler background.

(ii) The Lawson expatriate category

The expatriate category is that relevant to Hamam. Lord Hoffmann dealt with this category at paras 35-40 of Lawson. What he said can be set out in a number of propositions:

  1. It would be unusual for an employee who works and is based abroad to come within the scope of British employment legislation, but there are some who do.
  2. It will not be enough that:
    (a) the employer was based in Great Britain;
    (b) the employee happens to be British; and/or
    (c) the employee was recruited in Britain, so that the relationship was “rooted and forged” in this country.
  3. There must be “something more”. Lord Hoffmann proceeded to give two examples (“the expatriate examples”).
  4. The first example is someone who is “posted abroad” by a “British employer” for the purposes of a business carried on in Great Britain. That is to say, they are a representative of a business conducted in Great Britain, e.g. a correspondent for a British newspaper (“the British business exception”).
  5. The second is someone who is an employee of a British employer operating in, for practical purposes, what is an extra-territorial British enclave (“the enclave exception”).
(iii) Bryant v FCO

In relation to point 5 above, Lord Hoffmann considered the earlier Employment Appeal Tribunal decision in Bryant v Foreign & Commonwealth Office ([2003] UKEAT 174, unreported). Ms Bryant was a British national who worked in the British Embassy in Rome, but had been recruited in Italy, was employed on local terms and lived as part of the local community. The EAT held her outwith the territorial scope of ERA. In Lawson, Lord Hoffmann regarded this conclusion as correct.

Back to the present

(i) Hamam v British Embassy in Cairo: general

Hamam worked at the British Embassy in Cairo as a consular officer. Various parts of the factual background are cited in the EAT judgment: see para 6. For present purposes it suffices to note that Hamam was recruited in Egypt and the recruitment process was run from Cairo. Her home was also in Cairo. She also paid Egyptian taxes but no UK taxes or national insurance. The Employment Tribunal in a detailed judgment held it had no jurisdiction to hear the claim: the claimant was not within the territorial scope of the rights she relied on under ERA and the Equality Act 2010. Taking account of a range of factors, including whether the embassy was a “British enclave”, there was not the requisite connection to Britain and British employment law.

It is surprising that, when identifying the applicable legal standard, the ET said that it “considered carefully the factors for and against the tribunal having jurisdiction to hear this case”, and “concluded on balance that it does not” (para 93). That is not the legal standard, on the authorities, albeit the point is moot here: Hamam clearly would not have satisfied the requirement (on my view of the authorities) to have an overwhelmingly closer connection with Great Britain and British employment law than any other place: Duncombe (No 2) [2011] UKSC 36, para 16.

(ii) Hamam: the enclave exception

Hamam’s grounds of appeal suggested that the ET erred in law as to its approach to whether the embassy constituted a “British enclave”. That was misconceived. The EAT rightly noted, at paras 13 and 31, that Hamam did not satisfy the first part of the expatriate exception: to use a convenient shorthand, that the employment relationship was “rooted and forged” in Britain (see proposition 2 above).

At para 31, the EAT said: “[I]t seems to me that [in Bryant] the question of whether the British Embassy in Rome was a British enclave just did not arise on Lord Hoffmann's analysis [in Lawson], because Mrs Bryant was locally engaged [i.e. the relationship was not rooted and forged in Britain]. Although a British national, she was not an expatriate employee of the kind he was talking about in paragraph 39 and the preceding paragraphs [of Lawson]. As I have said, the claimant in the present case [Ms Hamam] is not an expatriate and so the question of whether she falls within [the enclave exception] just does not arise.”

This is the correct analysis. In “Searching for Clarity: Green v SIG Trading Ltd” 2017 Jur Rev 279, I argued that the EAT there had failed to take this two stage approach that the EAT has now adopted in Hamam.

Green concerned the British business exception, rather than the enclave exception. But in that case, Green lived in Lebanon and commuted to Saudi Arabia. He lived in Lebanon at all times during the recruitment process, albeit this was coordinated from Britain.

The key point in dispute was whether Green was working for the purposes of a business carried on in Britain, or for a separate business recently set up and carried out in Saudi Arabia.

This was important, it was thought, because if it was the former, Green could avail himself of the British business exception in Lawson. But I argued that the EAT should have dealt with the prior issue of whether Green was within the scope of being an expatriate: i.e. could that employment relationship be said to have been “rooted and forged” in Britain, and was he “posted abroad”? If the answer to these questions was “no”, the question in issue in the appeal would not have required an answer.

I wrote: “The second interpretation [of the British business exception in Lawson], which is more consistent with Parliament’s past intention, is that a claimant must be posted abroad from Britain. This assumes 'abroad' is anywhere but Britain and that the claimant is posted from Britain. It would, therefore, suggest 'rooted and forged' contains an implicit requirement that the claimant must be ordinarily resident in Britain at the time of the application or offer of employment, such as to allow them to be posted abroad to work for the purposes of a business conducted in Britain. This interpretation would result in the claimant’s appeal on this ground being dismissed because the proper extent of element (i) of the Lawson example [the rooted and forged requirement] is narrower in law than the factual circumstances of the claimant’s employment, given the claimant lived and worked abroad throughout the recruitment process.”

This is a similar analysis to that which the EAT has now adopted in Hamam, albeit in the context of the expatriate exception. Whilst Hamam is a more clear-cut case, much like that of Bryant, Green’s position can be characterised as a hard case: on the one hand, there was no local recruitment because it was conducted from Britain; on the other hand, Green was not posted abroad from Britain to work in Saudi Arabia. It is at least arguable that the antecedent requirements of the British business exception, namely (i) whether the relationship was rooted and forged in Britain; and (ii) whether Green was “posted abroad”, were not satisfied in his case.

The present and the past: what is Lawson now?

Whilst Hamam’s case was focused on the British enclave exception, the reality of her appeal was against the conclusion that her employment did not have the requisite standard of connection with Britain. This is because the ET’s judgment was structured as a multifactorial assessment, of which the issue of British enclave appeared to form one part. That was the view of the EAT, at para 36.

This raises the important issue of what Lawson’s significance is now in respect of both expatriate examples. This importance can be demonstrated by considering the position of either Hamam or Green, assuming in each case that the relevant antecedent requirements were satisfied.

If Lawson v Serco is still good law, in the sense that an ET would be entitled to apply the British business exception to the facts of Green without further enquiry and without that constituting an error of law, the matter could be resolved fairly swiftly. But it is not clear if that is the case. At para 34 in Hamam, the EAT quoted (and later agreed with) what Underhill LJ said in Jeffrey v British Council [2018] EWCA Civ 2253 at para 109: “I do not think that in the light of the post-Lawson case law it is right to conduct the analysis by reference to labels such as 'the [British business] exception', useful as they may be as shorthands. The correct approach is explicitly to address the sufficient connection question, as the ET did here.”

It appears to me that Underhill LJ would have refused even to consider applying the British business exception to Green’s case, or the enclave exception to Hamam’s case. Instead, what I take from his comment is that the ET has to carry out the connection test instead, without considering whether the respective expatriate examples could apply. If that is his view, I am in the unenviable position of disagreeing with it.

At para 109, Underhill LJ explained: “Lord Hoffmann’s statement that the [ERA] applies to workers of the kind identified at para 38 of his opinion establishes that in such a case the connection with Great Britain will typically overcome the territorial pull of the place of work, but his observations are in fairly general language and are not a substitute for a careful examination of the facts of the particular case: the developing case law has shown a number of different factual circumstances that do not fall neatly into Lord Hoffmann’s exceptions.”

It is important first to identify the common ground. I accept, as Underhill LJ rightly points out, that the expression of Lord Hoffmann is in tentative terms. There is frequent use of “may” in Lord Hoffmann’s judgment, when outlining the expatriate examples. I also accept Underhill LJ’s view that in a case that is not within the expatriate examples from Lawson, the connection test must be carried out.

But in my view the difficulty with Underhill LJ’s conclusion from this is (at least) twofold: (i) what follows at the end of the judgment in Lawson; and (ii) how the two subsequent UK Supreme Court judgments in this area have treated Lawson.

(i) What follows at the end of the judgment in Lawson

At para 40, Lord Hoffmann wrote: “I have given two examples of cases in which section 94(1) may apply to an expatriate employee: the employee posted abroad to work for a business conducted in Britain [the British business exception] and the employee working in a political or social British enclave abroad [the enclave exception]. 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. For the purposes of these two appeals, the [enclave exception] is sufficient. It leads to the conclusion that the appeals of both Mr Lawson and Mr Botham should be allowed.

One can see here another “may” in the first line. But Lord Hoffmann then applies the second example to the facts of the cases in that appeal. That must be of significance, and in any event outweigh any concern about the formalistic method of expression. In my view, its significance is compounded by how the Supreme Court has treated Lawson subsequently.

(ii) Treatment of Lawson by the UKSC

In Duncombe (No 2), Lady Hale (speaking for the court), wrote at para 3 that: “It is fair to say that had this issue [whether the claimants were within the territorial scope of the legislation] stood alone, it is unlikely that permission would have been given to bring an appeal to this court. It is common ground that the basic principle was laid down by the House of Lords in Lawson v Serco Ltd... It is also common ground that these teachers’ employment does not fall within either of the specific examples given in Lawson of people employed by British employers to work outside Great Britain who would be protected from unfair dismissal. The question is whether there are other examples of the principle, of which this is one.”

At para 9, Lady Hale wrote: “The Employment Tribunal rightly held that neither of Lord Hoffmann’s specific examples applied to teachers employed by the British Government to work in European schools abroad.”

In Ravat [2012] UKSC 1, at para 13, Lord Hope wrote: “[I]t is plain that it would be difficult to fit [Ravat’s] case into any of the categories identified by Lord Hoffmann in Lawson. He was not working in Great Britain at the time of his dismissal. He was not a peripatetic employee. He was not working abroad as an expatriate in a political or social British enclave. Nor had he been posted abroad to work for a business conducted in Great Britain, as he was commuting from his home in Preston and the company for whose benefit he was working in Libya was a German company.”

At para 28, Lord Hope wrote: “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.”

What each of these references shows, in some cases impliedly, is that Lawson is still regarded as good law by the Supreme Court. It shows that the court did not think that an ET would have erred in law by (i) considering whether, in a permissible case, a claimant satisfied either of the expatriate examples from Lawson; and, (ii) if they did, simply applying the relevant expatriate example and going no further. Nothing in Duncombe (No 2) or Ravat detracts from that essence of Lawson, insofar as the expatriate examples are concerned.

Duncombe (No 2) was supplementing, not rewriting, the existing Lawson structure: it set out some other relevant factors in assessing whether claimants who were not within the existing expatriate examples set out in Lawson had an equally strong connection. It also confirmed that the standard to be satisfied was that of “overwhelmingly closer connection”. Most cases that followed were not within the expatriate examples and therefore did require the application of the connection test.

It is true that in Duncombe (No 2), Lady Hale wrote at para 8 that it was a “mistake to try and torture 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”. But that is not the same as saying that an ET should not consider in an arguable case, such as Green or Hamam (with the assumption I made earlier about both being expatriates), whether the relevant expatriate example is capable of applying. That is what I consider is the logical conclusion of Underhill LJ’s view in Jeffrey, which the EAT agreed with in Hamam.

In Ravat the claimant was not an expatriate or a peripatetic employee. It is therefore not strictly in point. It is true that Lawson was referred to throughout, in order to pull out points of principle. But, in my view, Ravat cannot be viewed as doubting any aspect of Lawson on the issue of the expatriate examples.

Given that the post-Lawson case law derives from the guidance in Duncombe (No 2) and Ravat, it follows that in my view there is no substantive reason for Lawson to be treated in the manner that Underhill LJ suggests.

Conclusion

For the reasons given above, it should still be permissible for an ET to decide a case on the basis of either the British business exception or the enclave exception set out in Lawson.

In doing so, the issues of (i) whether the employment relationship was “rooted and forged” in Britain; and (ii) whether the employee is “posted abroad” and their work carried out is for a British business; or (iii) whether the place of work is a British enclave, for the purposes of the respective expatriate examples, should be treated as questions of law. This is on the basis that they each constitute an evaluative judgment of the primary facts found by the ET. This is the same approach as adopted for the connections tests, which are applicable for those (a) outwith the Lawson expatriate examples; or (b) commuters such as Ravat.

It is true that the law in this area appears to have developed considerably since Lawson. But it is also true, in my view, that Lawson cannot be dismissed as no longer relevant insofar as it concerns expatriate employee claimants. Hamam brings that issue to the fore. Understanding the continuing importance of Lawson might well be the difference, in an appropriate case, between a claimant being entitled to present their substantive claim or not.

The Author

Kieran Buxton, trainee solicitor, Davidson Chalmers Stewart LLP, and ordinary course tutor, University of Edinburgh

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