Why jet-setting employees are a legal headache

SUPPOSE an employee – let’s call her Snow White – works in Paris but lives in London. How much “home” or “train” work does White need to do to be covered by English laws? In the recent case of British Airways v Mak, the Court of Appeal decided that English tribunals have jurisdiction to hear discrimination claims from a Hong Kong-based air stewardess who spent most of her time working outside the UK. The case has resonance in the City, where “international commuter” arrangements are common.

Mak’s time in Britain included time spent landing and taking off, briefings, resting and training. The court found that she did enough “work” here to bring her within scope of discrimination laws, which only required that she work “partly” in Britain. The Equality Act 2010 is now in force and the reference to “partly” is no longer there. It is not clear how much work the employee needs to do here to use our equality laws. Nor is there clarity for other British employment laws, such as the right to claim unfair dismissal.

The difficulty for multinationals is that there are no consistently applied international rules for deciding when a particular country’s “mandatory” employment laws apply – and more than one country’s laws can apply at the same time. Suppose White is pregnant. Will French or English maternity laws apply? Her employer may find it hard to comply with conflicting rules and, in practice, it may be easier to offer White the best of both worlds.

Technological changes accentuate the challenge. While laptops and mobiles give employees more freedom, employers may not even know which country staff are working in. And the worry is not just about compliance with employment laws – place of work can have significant tax and social security implications too. This may be a particular concern for employees who are mobile within the UK too, such as IT consultants.

Clearly the current uncertainty is bad news for international businesses, but it can also be difficult for mobile employees. An employee facing redundancy needs to know what his rights are so he can decide whether severance terms are acceptable. For highly paid employees, uncertainty about mandatory employment laws may not create significant difficulties, as the financial consequences of termination are more likely to be driven by their contracts, for example by bonus terms.

However, if the reasons for dismissal are discriminatory then the application of mandatory employment laws may significantly affect compensation for employees at all salary levels. Suppose White’s employer dismisses her because she is pregnant. Could White make a discrimination claim here or should she claim in France or, if both, which would be best? Following Mak, it seems likely that the court would conclude that White does some work in Britain, but does she do enough work here to allow her to make claims here? White and her employer would need advice from both English and French lawyers to understand the options.

Discrimination laws are intended to implement European directives. The English Supreme Court is expected to clarify the impact of European law on employees’ rights to make claims here shortly, when it hands down its decision in Duncombe, a case about the rights of fixed term teachers at international schools. But that is unlikely to be the end of Snow White’s story. Even if employees’ rights are clarified soon under English law, the European Court of Justice, which takes precedence over English courts, could take a different view.

All this uncertainty is not good for international business or employees and creates unnecessary barriers to development of global mobility and flexible working practices. Most employers and employees are likely to take a practical approach to resolving their differences. However, the relatively small number of cases about jurisdictional issues that reach the courts belie the depth of the problem. High legal costs associated with dealing with technical jurisdictional points discourage both parties from litigating but still create significant extra costs. Clear understanding of the value of legal claims is essential for efficient settlement of disputes – and for both parties to make rational decisions about appropriate arrangements at the start of the employment.

Juliet Carp is a UK and international employment law specialist at Speechly Bircham LLP and the author of Drafting Employment Documents for Expatriates