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Employment tribunal claims by British crew can put owners on the rocks

Posted: 18/02/2021

The decision of the Employment Appeal Tribunal (EAT) in Crew Employment Services Camelot (CESC) v Gould [2021] UKEAT/0330/19/VP has highlighted the problems that can arise for yacht owners through the employment of British crew.

All territorial jurisdiction cases are highly fact-specific. However, Mr Gould’s case confirms that a connection of an employee’s living or working arrangements to Great Britain can be sufficient to grant a tribunal jurisdiction notwithstanding the governing law and jurisdiction in the crew contract. This is important because most British crew will be able to establish that they live in Britain, which can be sufficient for the tribunal to be granted jurisdiction.

It also now seems that the residency of the ultimate beneficial owner (UBO) can be a highly persuasive factor, notwithstanding the typical use of corporate structures to put distance between the UBO and the yacht.

Mr Gould’s case is relevant to the UK only, but the approach taken is consistent with the approach under French law, where, in broad terms, as soon as there is any French connection for a yacht owner, then the owner runs the risk of a French employment tribunal asserting jurisdiction (which will likely reclassify any crew contract as one of French law and jurisdiction).

Moreover, even if a crew member is employed via a crew agency or management set up, French tribunals will likely look through such an arrangement and will ask who the ‘real’ employer is (ie where the orders were coming from). If the facts of Mr Gould’s case were transferred to France, the UBO would likely have found himself as the de facto employer in France.

Background and facts

Mr Gould, a British national, was employed as the captain of the M/Y Amaryllis, which was owned by a company registered in the Cayman Islands.

CESC was Mr Gould’s employer and is a subsidiary of a crew employment services company registered in Guernsey, with its only premises situated in Guernsey, and managed by a company registered in France. The ultimate beneficial owner resided in England.

It was found as a fact that although the UBO was not the actual owner of the yacht, he directed Mr Gould regarding the sailing of the yacht.

The yacht was found to be Mr Gould’s normal place of work, and he was appointed to his post in Antigua (albeit Mr Gould signed a contract of employment at the end of his first tour of duty, this being in Falmouth).

As is normal for yacht crew, during his employment Mr Gould was required to work at such locations as the yacht happened to be in from time to time (which was variously Antigua, Falmouth, Portsmouth, Greenock, West Palm Beach Miami, the Turks and Caicos, St Martin and St Kitts). It was found as a fact that the yacht spent about 50% of her time in British waters.

Mr Gould was also generally paid in US dollars into a US bank account and paid tax in the USA (he was resident in the USA throughout his employment). Mr Gould’s contract of employment provided that it was governed by the laws of Guernsey and the parties agreed to submit to the jurisdiction of the Courts of Guernsey in all matters arising out of the agreement.

On 28 June 2018, Mr Gould’s employment was terminated whilst the yacht was present in England and he presented a claim for unfair dismissal.

Legal principles and decision

Employment tribunals can only deal with matters specifically reserved to them by statute. Unfair dismissal claims are such, provided that the claim is within the territorial scope of the tribunal; tribunals cannot hear a claim which is outside the relevant territorial scope.

Under the employment tribunal rules, where it is asserted that a tribunal lacks a territorial connection to hear a claim due to the international nature of the working relationship, it is necessary to determine that point as a ‘preliminary issue’ prior to the substantive case being allowed to proceed.

In such cases, the tribunal is required to consider whether there is a sufficient territorial connection between the facts of the case and Great Britain (this focusing on a sufficient qualitative connection rather than simply the number of factors for or against an association with Great Britain). There are three broad groups of cases, as follows:

  • those in which (at the relevant time or during the relevant period), the claimant worked in Great Britain;
  • those in which the claimant worked outside Great Britain; and
  • those in which the claimant lived and/or worked for at least part of the time in Great Britain.

Given Mr Gould’s pattern of work, his case fell into the final category. The effect of this was that his case did not have to be ‘truly exceptional’ for territorial jurisdiction to be established (as is required for cases in the second group listed above); there merely needed to be a ‘sufficiently strong’ factual connection with Great Britain and British law.

The employment tribunal held that:

  • Mr Gould spent some 50% of his working time in Great Britain; and
  • he received his directions in relation to the use of the yacht from the UBO, from England.

These points indicated that there was such a sufficiently strong connection. The tribunal therefore allowed the case to proceed to be determined on the merits.

CESC appealed the decision to the Employment Appeal Tribunal (EAT). Such appeals can only be on points of law (broadly, that the wrong legal test was applied by the tribunal and/or that the correct legal test was applied but that the decision reached was one that no reasonable tribunal could have reached).

Having reviewed the tribunal’s decision, the EAT held that there was ample evidence to support the decision and that there was a sufficiently strong connection with Great Britain for the case to proceed.

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