If you are an expat executive working in Great Britain, at some point you will want to know the answers to two questions: When will the laws of England and Wales govern my contract, and when will the English courts have the power to hear my claim?
The first issue is to consider what the applicable law of your contract is. This is often set out in your contract.
Generally, the parties to a contract have the freedom to choose the applicable law, but in reality it is often the employer that chooses. That choice will often be the country’s laws that are most favourable and convenient to them.
The employer’s choice is not the end of the matter though. Employees working in countries that are signatories to the Rome Convention may apply to override the parties’ choice in the contract. There are also situations where local laws cannot be contracted out of because they are enshrined in statute or case law, such as minimum notice rights.
In the absence of choice by the parties, international laws provide, broadly speaking, that the country with which the contract is most closely connected, shall govern the contract; or the law of the place where the party performing the service has their normal residence.
The relevant law in play is not the only issue though. The second issue is to consider if the contract can be enforced here (whichever law applies to the contract).
For example, English law does not need to be the applicable law for the English Courts to have power to rule on a case. In other words, the English Courts can decide on a dispute governed by Russian law, for example. The Brussels Regulation applies where the employer (whatever their nationality) is based in any EU member state.
The Brussels Regulation states that the employee may sue their employer in the English Courts if the employer is “domiciled” (or sufficiently based) there. Generally, an employer who has a branch, agency or other establishment in England, is “domiciled” in England.
For employees in countries outside the EU wishing to bring a claim in Great Britain, the position is more complex and depends on which country they are based in, amongst other factors. In all cases, employees should seek specific advice.
How Can Contract Law Claims Be Brought in England?
In England, a breach of contract claim can be pursued in the High Court, County Court, or an Employment Tribunal. Slightly different titles apply in Scotland, but the rules are broadly similar. A high value breach of contract claim is usually brought in the High Court. The County Court hears lower value contract claims.
Time Limits
There is a 6 year limitation period (from the date of the breach) for a breach of contract claim.
Compensation
Awards for damages for breach of contract in the Courts are uncapped up to the value of the loss, but in many cases, the amount recoverable will be restricted by the period of your contractual notice. In England, contractual disputes where injunctions are threatened, for example, where your employer tries to enforce a non-compete clause or non solicitation of clients clause, are also usually dealt with in the High Court.
Costs
It is important to appreciate that the loser of a Court case will normally pay the winner’s reasonable legal costs. It is likely to take longer to reach a final hearing than it would do at an Employment Tribunal and costs can be significant.
Contract Claims in the Employment Tribunal
The Employment Tribunal is a less formal forum, which permits a claim for a breach of contract to be lodged if it arises on termination of employment. However, an award for breach of contract in the Employment Tribunal is capped at £25,000.
There is also a short limitation period for bringing a Tribunal claim for breach of contract, of three months less one day from the last day of employment. Legal costs of the winning party are also rarely awarded in the Employment Tribunal.