Can you dismiss an employee while they’re overseas?

If you send someone on an assignment to another country for three months, and then sack them while they’re in that other country, under what jurisdiction can they sue you? George Cooper, Partner, Melbourne and Asia, of Ashurst, says the short answer is potentially both. 

This sort of question is answered by consulting the terms of the employee's employment contract and the applicable provisions of Australia's and the overseas jurisdiction's statutory employment laws.

Employment contract – Governing law clause

Generally speaking, parties can agree on which jurisdiction governs the employment contract.  Such a contract may, for example, provide that the governing law of the contract is that in force in a particular state in Australia.

This type of governing law clause may have force in any contractual disputes, such as where the employee makes a claim for some entitlement arising exclusively under the employment contract. 

Statutory law

However, parties have no such flexibility when it comes to statutory law. This usually regulates matters such as minimum employment entitlements and provides regimes enabling employees to seek redress for termination of employment in particular circumstances.  Such statutory law is ordinarily mandatory and cannot be contracted out of by the parties.

Take, for example, an employee of an Australian company who is seconded from Australia to Singapore for a period of three months.  In the event that the employer unilaterally terminates the employment part way into the assignment, the employee could potentially sue in two different jurisdictions.

Coverage of Australia's Fair Work Act 2009 (Cth)

In general, Australia's Fair Work Act 2009 (Cth) affords employee entitlements and protections to "Australian-based employees".  Importantly, and somewhat confusingly, the term "Australian-based employees" encompasses employees located outside of Australia provided that the employee is employed by an "Australian employer" (excluding employees originally engaged outside Australia, to perform work outside Australia).  So, it is possible for an eligible employee on an assignment to Singapore to make an unfair dismissal claim in the Fair Work Commission if the Australian employer terminates the employment during the course of the assignment.

Coverage of Singapore's Employment Act (Cap. 91)

Similarly, the employee may also be covered by Singapore's Employment Act (Cap. 91).  This legislation generally applies to employees working in Singapore. (It excludes certain employees, such as those employed in managerial or executive roles and earning more than a prescribed remuneration threshold).  In the event that this legislation applies, the employee could claim that he or she was dismissed without just cause or excuse and pursue a remedy under the relevant provisions.  There may be technical arguments as whether the prescribed qualifying period for managerial or executive employees has been fulfilled, and also procedural difficulties in pursuing a claim against a foreign (i.e. non-Singaporean) entity.  However, the risk of a claim and liability in Singapore would be significant from the employer's perspective.

Possibility of dual coverage

It is imperative for employers who assign employees to work in overseas jurisdictions to be mindful of the law governing the employment relationship, and the possibility of dual coverage across jurisdictions.  In many instances, local statutory employment law in an overseas jurisdiction will apply and provide the employee with an extended suite of options for commencement of proceedings concerning the termination of employment.  Employers should, at the outset, seek to obtain a greater understanding of these risks and how to best to manage them.