US employee seeks protection of UK employment law

When does a US-based US citizen, employed by a UK subsidiary of a US group, come within the scope of UK employment law and protection? Well, not in the case below. The UK Employment Appeals Tribunal confirmed in the recent case of Fuller v United Healthcare Services, Inc. that the employee in question did not have sufficient “connection” with the UK to be protected by UK unfair dismissal legislation.

The facts

A US citizen (Mr Fuller), a resident in Texas, was Chief Operating Officer with UHG (a US based global group).

In January 2012, his role continued but he agreed to shift his focus to the UK and Middle East.  He remained US-based but was to spend up to 49% of his time in the UK as Managing Director of UHG’s UK subsidiary. In the event that he spent more than 49% of time in the UK and so incurred UK tax, UHG agreed to pay the tax. UHG leased an apartment for him in London (cheaper than hotels), paid a re-location allowance and agreed to pay for his partner to visit London twice a year.

Meanwhile, Mr Fuller maintained his home in Texas and continued to be paid in US dollars. His US terms of employment, concerning pensions, bonus, holiday and pay rises continued as before.

Mr Fuller returned to the US for good in October 2012; in January 2013 UHG dismissed him without cause.

As no redress was available in the US he brought a claim in the UK employment tribunal for, among other things, unfair dismissal.

Would the UK tribunal take on the case? At first hearing and then on appeal the answer was no. In normal circumstances, where a person is ordinarily working in the UK there is the strongest indication that the law intends that person to be protected by UK labour law.

However, in Mr Fuller’s case he had maintained an “overwhelmingly strong connection” with the US. His new position did not involve a major break with his previous role, nor did he “sever any of the continuities or realities of his existing US employment”. His UK role had ended before his dismissal and he was dismissed in the US. The key question was whether Mr Fuller had given up his US base to move to the UK. Both tribunals found that his employment contract maintained that he had not. He therefore had not established the “required connection” with the UK to be protected by British employment law.

The lesson

Anyone working in the UK would normally expect to come under the jurisdiction of British employment law. However, if the individual has not in reality severed ties with another country or established a proper connection with the UK it may be that the UK courts will consider that the employee does not qualify for that protection and instead must rely on the law of the country where the employee’s connection is strongest.

All cases will depend on individual facts and circumstances. Mr Fuller’s case might have been different if he had been paid in sterling, been included in a UK benefits scheme or hadn’t so cold bloodedly set out to limit his personal exposure to UK tax.

Advice at the outset might have helped both sides.