Trading Laws

When deciding whether an employee has a strong enough connection to the UK for the purposes of bringing a tribunal claim, competing factors can be taken into account. In Green v SIG Trading Ltd, the Employment Appeal Tribunal (EAT) held that when balancing those factors, tribunals have to make their own objective assessment rather than rely on the employer’s subjective explanation. 

Basic facts 

Mr Green, who lived in Lebanon, was appointed the managing director of a UK-registered company in Saudi Arabia. He commuted for two to four days, and the company paid for his accommodation. He was paid in sterling, although he was exempt from UK tax and NI contributions.  He was not able to join the company’s pension scheme as he did not live in the UK. 

His contract, which expressly stated it was governed by English law, was a standard UK contract amended in some parts and included references to British statutory employment protections. It also contained a mobility clause, stating that he might be required to work in the UK, as well as post-termination covenants relating to the UK and Ireland. The company’s IT, HR and payroll support was based in the UK as was Mr Green’s line manager and the three employees who reported to him. 

When he was dismissed by reason of redundancy, he brought a claim for unfair dismissal in the UK. 

Tribunal decision 

The tribunal held that it did not have jurisdiction to hear his claim because it found that Mr Green had stronger connections to Saudi Arabia and the Middle East. 

The tribunal balanced the various factors and noted that Mr Green was an expatriate employee not working for the benefit of a business in Great Britain but developing an entirely new business selling to new contractors in Saudi, pursuant to local laws and customs. In practice the Saudi Arabia budget was independent of the company’s UK financial budget, so much so that when the Saudi Arabia business was closed because of poor financial performance the losses were not absorbed into the company’s UK finances. 

Mr Green appealed on a number of grounds, including that the tribunal had focused on the employer’s subjective reasons for giving Mr Green a UK contract and failed to take into account other relevant factors.  

EAT decision 

The EAT held that the tribunal had been entitled to find that this was a case where it was appropriate to balance the competing considerations in assessing whether the stronger connection was with Great Britain and British employment law or the Middle East.  

In so doing, however, it had disregarded the fact that the parties had agreed that Mr Green’s contract should be governed by English law. And although the tribunal was entitled to view this factor as just one of many that it had to weigh in the balance, that did not mean it could be disregarded. Apart from the fact that it was clearly a significant factor, the tribunal had wrongly accepted the company’s subjective explanation that it had used its standard form UK contract as a matter of “convenience” instead of making its own objective assessment. 

Although the ultimate assessment on the weight to be given to this and other factors was for the tribunal, the apparent failure to consider a relevant matter rendered the conclusion unsafe and the appeal was allowed on this basis.