Employment tribunal claims by overseas employees – Simpson v Intralinks

by Laurie Anstis on June 24, 2012

In Simpson v Intralinks, the Employment Appeal Tribunal looked at the question of when an individual employed overseas can bring an employment tribunal claim against a UK-based employer.

Lawson v Serco and, most recently, Ravat v Halliburton have considered the territorial extent of unfair dismissal law, but the Simpson case was rather different – not least because the contract of employment contained an express clause stating that the contract was subject to German law, and that any dispute should be subject to the courts in Frankfurt.

The facts

In Simpson:

~ the Claimant lived and worked in Germany (with some work visits to  the UK),

~ the Respondent employer was a company registered in England and Wales,

~ the contract of employment was written in both German and English, with the German version being described as the authoritative version, and

~ the contract of employment contained a choice of law clause stating that the contract was to be construed “exclusively in accordance with the laws of the Federal Republic of Germany”, with the place of jurisdiction being (again, exclusively) Frankfurt.

The nationality of the Claimant is not stated anywhere in the judgment, and does not seem to have been a relevant consideration.

The Claimant sought to bring a sex discrimination and equal pay claim against her employer in the employment tribunal. It was initially struck out by the employment judge, but she applied for a review and pointed out (for the first time) the provisions of the Brussels I Regulation on international law. The application for review was turned down, and the Claimant appealed to the EAT.

In the EAT, Langstaff P identified three different jurisdictional points for consideration:

(a)  The territorial scope of the statute

Were the Sex Discrimination Act 1975 and Equal Pay Act 1970 (which applied at the time) capable of covering the Claimant’s work?

The answer to this was yes, since her work was done partly in the UK, and that was sufficient under what was then section 10 of the Sex Discrimination Act.

(b) The applicable law

Which country’s law should be applied in construing the contract?

This was governed by the Contracts (Applicable Law) Act 1990, which applied the Rome Convention in the UK. As a general rule, the Rome Convention permits the parties to choose which law applies to their contract – in this case, German law.

There are special exceptions for employment contracts, if the contract is “more closely connected with another country” – but in this case the judge found that the contract was not “more closely connected with” the UK than Germany, so the choice of German law was valid.

But that was not the end of it. Article 7(2) of the Rome Convention says that:

“Nothing in this Convention shall restrict the application of the rules of the law of the forum [i.e. the court that hears the case] in a situation where they are mandatory irrespective of the law otherwise applicable to the contract.”

It is clear that the Sex Discrimination Act and the Equal Pay Act are mandatory laws in the UK. They cannot be derogated from. In one of the most difficult passages in the judgment, the President also found that they were mandatory “irrespective of the law otherwise applicable to the contract”. This meant that if the employment tribunal could hear the case, UK sex discrimination and equal pay law had to be applied even though the proper law of the contract was German.

(c) The forum for the case

Which country’s courts should rule on the dispute?

This was governed by the Brussels I Regulation, which, in the context of a contract of employment, provide that the employer can be sued by the employee either in the country in which the employee usually carries out their work, or in the employer’s country of domicile (Article 18). In the UK, in this context domicile includes where the employer is registered (if it is a corporation).

The President decided that this gave the employee a choice – she could either sue the employer in the country in which the she usually carried out her work (Germany) or in the employer’s country of domicile (the UK). There was nothing wrong with the employee suing her UK-based employer in the UK, despite the fact that she usually worked in Germany and that the contract itself said that she must sue in Frankfurt.

The outcome

As the President himself recognised:

“The claim may not be the easiest in some respects to determine, since provisions of German law may have to be determined as a matter of fact before the Tribunal, in order to satisfy the Tribunal at the outset that it may permissibly go on to determine the facts and apply the two Acts to them, since whether there is a contract of employment within the extended meaning given to that phrase in the Acts may depend on [German] law rather than English common law: but that the tribunal has jurisdiction on this basis is clear.”, and

“Though it may seem at first blush counter-intuitive that where parties agree both that the law which will govern their employment relationship is foreign, and that the courts in which any employment dispute are to heard are also foreign, nonetheless the employee is permitted to chose to litigate the issues in the United Kingdom. Once, however, the policy of the international conventions is understood to be that employees need protection, as being generally in a weaker position than employers when negotiating their contracts of employment, such that the law should redress the imbalance by providing the employee with a choice of which otherwise the unequal terms of a contract would deprive him, then the consequence is (in general) not counter-intuitive, but may be seen as (in general) tending to justice.”

The tribunal will use German law to determine whether there is a contract of employment, and if there is, then go on to apply British concepts of sex discrimination and equal pay to determine those claims.

Some comments:

(a) I was wondering whether this case would have the additional effect that the employment tribunal might have to apply any German statutory sex discrimination or equal pay rules, if they were more favourable to the employee than the UK rules. Such provisions would be German law, just as much as any question of the contract of employment would be. However, the tribunals have very specific statute-based jurisdiction, so this seems unlikely. It does leave open the question of whether German statutory rules applicable to employment could be enforced in any other UK court.

(b) The judgment expressly states that the Lawson and Serco tests for unfair dismissal jurisdiction would not be satisfied in this case – so a combination of international treaties on the choice of law and the precise rules on discrimination jurisdiction have given a wider territorial jurisdiction in this case than would have applied in an unfair dismissal case, despite German law being the designated law of the contract.

(c) It is a striking example of some of the complexity of issues that can arise in an employment tribunal hearing. The tribunal will now have to apply both German and British law during the course of its hearing.

I’d be interested in hearing from people in the comments (below) about whether they have ever had to face this kind of issue in the tribunal and, if so, what happened.

[Note: questions about the applicability of the laws of different countries are notoriously difficult. If you do have any specific question about how the law would apply in any individual situation you must seek professional advice and not rely on this blogpost. The discrimination statutes and at least one of the international treaties referred to have changed since this case originally came to the tribunal.]

One comment

As you say, and as this case proves, employment law can be much more technical than meets the eye. The problem is that, for the average case, legal costs can easily outweigh the amount in dispute.

by B Jones on 1 July 2012 at 5:49 pm. #