Good news for those employed in Hong Kong under English Law contracts

Many expatriate employees engaged to work in Hong Kong either generally or for specific periods, can often be employed under contracts expressly stated to be governed by the law of another jurisdiction.  Where contracts are expressed to be governed by the law of England and Wales, that potentially gives those employees the rights and protections under English law, even though they work in Hong Kong. This would include the extensive protections against unfair dismissal provided by the UK’s Employment Rights Act.

However as a matter of English law, the protections provided by the Employment Rights Act and the right to sue in the UK’s Employment Tribunal, only apply to overseas employees where:

1. Their employment contract is expressly stated to be governed by the law of England and Wales; and
2. The employee and the employment have “a strong connection to the UK”.

The recent UK case of Green v SIG Trading Limited (Employment Appeals Tribunal – 28 April 2017)  confirms that an employer’s subjective reasoning and explanation as to why the contract is said to be governed by English law should not be taken into account in deciding whether there is a “strong connection” and the Employment Tribunal should apply an objective test to the terms of the contract and the employment in deciding whether there is a sufficient connection to the UK to allow the employee to invoke the jurisdiction of the Employment Tribunal and claim (amongst other things) for unfair dismissal under English law.

The key facts on which the Employment Appeals Tribunal based its decision in deciding a close connection in this case were:-

1. 1. the employer was a company registered in the UK;
   2. the contract referred to the employee’s position overseas as being a “secondment” outside the UK;
   3. the operations undertaken outside the UK were part of the accounting and financial reporting for the UK;
   4. the employee reported to a manager based in the UK, and other staff and support services were located in the UK; and
   5. while the above factors were all persuasive, the conclusive point in the appeal which led to the Employment Tribunal’s conclusion being overturned was that the contract was expressly stated to be governed by British law. This had been disregarded by the Employment Tribunal on the basis of the employer’s explanation that the term had simply been agreed as a matter of “convenience”.  The Employment Appeals Tribunal found that the governing law was a highly relevant point and it was not open to the Employment Tribunal to disregard it based on the employer’s subjective explanation.  On this basis the Employment Appeals Tribunal found the Employment Tribunal’s conclusion unsafe, and the appeal was allowed.

   Employees employed in Hong Kong will benefit from the mandatory laws of Hong Kong (in particular their rights and entitlements under the Employment Ordinance, Employees Compensation Ordinance and the Discrimination Ordinances) even if their contract is stated to be governed by a foreign law (including the law of England and Wales).  Where employees engaged in Hong Kong have a “close connection” to England and the contracts are governed by English law, this case potentially provides them with valuable and additional rights and the option to claim under the protections afforded by English law even though they are employed in Hong Kong.

   Russell Bennett
   Partner | Email

   Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.