Employment Update: Working

13 February 2008

A German employee based in Germany but with a contract subject to English law may claim holiday pay in the UK.

In Blease v MBT Transport the EAT was asked to consider the case of a German lorry driver who worked in Germany and Austria. His employer was a company registered in England and his employment contract contained a 'choice of law' clause specifying that the contract was subject to English law and the English courts should have exclusive jurisdiction to settle any disputes.

When he was dismissed he brought claims in the English employment tribunal for breach of contract, unfair dismissal, unlawful deduction from wages and unpaid holiday pay. Apart from the issue of territorial jurisdiction there was also an issue on time limits - he had filed his claim one month out of time because he had been waiting for his legal expenses insurers to decide whether his claims should proceed in England or Austria.

On the time point, the EAT considered that the tribunal had not considered the evidence carefully enough before deciding that his delay had been unreasonable and remitted this issue for rehearing.

If the time limit issue was decided in his favour then the breach of contract claim could proceed.

So far as his other claims were concerned, the EAT considered that, following the law as laid down by the House of Lords in Lawson v Serco, his claims for unfair dismissal and unlawful deduction could not proceed because he did not work in the UK.

It made no difference that English law was the law of the contract. So far as such statutory claims were concerned, all that mattered was where, in fact, he worked. The wording of the contract 'did not alter the picture'.

However, his holiday pay claim was based on the Working Time Regulations which were in turn based on the European Working Time Directive. His legal right here was not based on UK domestic law but on an EU Directive which should be given direct effect where English law was the relevant domestic law. Subject to the time limits issue, his holiday pay claim could proceed an in English tribunal.

Points to note -

  • This decision in Bleuse muddies the waters again for multi-national companies or those with peripatetic employees as one employee may have different rights exerciseable in different jurisdictions. It seems that employers cannot cover the point completely by specifying in the contract where any disputes should be resolved. Claims deriving from UK statutes (such as unfair dismissal and unlawful deduction claims) can only be brought in the UK tribunals if the claimant is based in the UK or otherwise fulfils the conditions laid down in Lawson v Serco. Whether breach of contract claims can be brought in the UK will depend on the terms of the contract itself and the application of the Brussels Regulations. And now it seems that claims emanating from European Directives that are enforceable in the UK– such as holiday pay claims – may be brought in the UK if UK law is the proper law of the contract regardless of where the employee is actually based.

  • The EAT in Bleuse acknowledges that it has not made things simpler by coming to this conclusion. It specifically mentions earlier cases in which the EAT held that claims under the Disability Discrimination Act by an employee based in Malaysia and under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations by employees working in European schools could not be brought in a UK tribunal. As both these claims emanate from European Directives (the Equal Treatment Directive and the Fixed Term Work Directive) it may be that if they were decided now the answer would be different. We shall keep you updated on further developments in this area.

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