Are employees protected by UK employment law on the high seas? – Aye, Aye Captain

It could be the opening to a riddle. A company registered in Guernsey, who run their human resources function from France, employ a Scottish stewardess, whose line manager was located in Spain, to work on a super-yacht travelling around Europe, leaving from a German port, never docking at a UK port or sailing in UK waters. She was paid in euros and made no National Insurance Contributions. Why would employment law in England and Wales apply?

This was the conundrum that faced the Employment Appeal Tribunal (“EAT”) last month when deciding Yacht Management Company Limited v Gordon. Ms Gordon was employed by Yacht Management Company Limited (“YMCL”) from March 2019 to October 2021, when she was dismissed by reason of redundancy. Ms Gordon brought a claim for unfair dismissal (which is a statutory, not a contractual claim) under the Employment Rights Act 1996. YMCL sought to have that claim struck out on the basis that the Tribunal did not have jurisdiction to hear that claim; it argued that Ms Gordon’s contractual duties were only ever performed on the super-yacht and that there was insufficient connection between Ms Gordon’s employment and Great Britain.

By and large, the general rule is that the place of employment is the decisive factor when establishing the relevant territorial jurisdiction. Exceptions to this rule can be made where the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that Parliament intended that the employee should have the right to bring claims under the Employment Rights Act. Both parties agreed that Ms Gordon was a “peripatetic” employee, meaning that she had no fixed workplace. An earlier case, Lawson v Serco Ltd, held that peripatetic employees could bring a claim of unfair dismissal in the tribunal, provided that the employee is “based” in Great Britain. This required the EAT to navigate the full factual matrix to determine where Ms Gordon was ‘based’.

Where is an employee’s “base”?

In the case of Diggins v Condor Marine Crewing Services Ltd, Elias LJ reasoned that an employee’s base is, “where his duty begins and where it ends.” A later case of Windstar Management Services Limited v. Harris illustrates this principle. The employee lived in England and was employed to work on a US owned cruise ship in the Caribbean. To meet the ship, he would fly from a UK airport, but importantly, his working time commenced at the UK airport. The UK was therefore the employee’s base. The decision of R. (on the application of Fleet Martime Services (Bermuda) Ltd v Pensions, also found that a seafarer, who worked in foreign waters but who joined the vessel from a UK port, began and ended his duties at the port.

YMCL argued this would mean that Ms Gordon’s base should be in Germany because her “tours of duty” were stated in her contract to commence in Germany. However, the EAT found that the wording “tours of duty” did not mean “work commenced” but was intended to mean “the claimant’s work on the vessel during voyages,” and her working time actually commenced when she left her home in Aberdeen. A yacht, even if it is a luxury super-yacht, was a means of transportation from one place to another and could not be a base.

The EAT concluded that there was no reason why an employee’s ‘base’ could not be their home address and the fact that YMCL paid for Ms Gordon’s travel expenses from Aberdeen to the German port was highly influential. YMCL’s appeal ran aground.

Other factors?

In addition to the question of Ms Gordon’s ‘base’, the EAT held that there were “ample” other factors granting the EAT a fair wind to conclude that the claimant’s base was in the UK such as:

• YMCL’s contractual liability to pay Ms Gordon’s travel expenses;
• Ms Gordon’s bank account being located in the UK; and
• Ms Gordon paying income tax as a Scottish resident, albeit no National Insurance Contributions.

As the law of unfair dismissal was common to both the law of England and Wales and to Scotland, the Tribunal and the EAT were quick to “disregard the existence of Scots Law” for the purposes of the discussion.

The EAT stressed that the question was not plain sailing, however, these additional factors, combined with the EAT establishing that Ms Gordons’s base was at her home address, lead the EAT to conclude that the Tribunal had territorial jurisdiction to hear the claim.

The judgment does not rock the boat and reaffirms earlier case law, however, by allowing a peripatetic employee’s base to be their home address, it does pose the possibility that members of the same crew leaving from the same port, employed by the same employer, may all have a different base and each employment contract being subject to the laws of different jurisdictions. Employers may like to batten down the hatches and examine the employment arrangements in place for any employees who travel internationally to perform their duties so that they don’t inadvertently drift into choppy waters.

Should you require advice in relation to any of the matters raised in this blog, please contact Linky Trott or any other member of the Employment team.

If you aren’t receiving our legal updates directly to your mailbox, please sign up now