(1) Duncombe and others (2) Fletcher v Secretary of State for Children, Schools and Families [2009] EWCA Civ 1355 CA

fixed-term contracts | territorial jurisdiction | European law rights

The Court of Appeal has held that an employee who was employed under a series of fixed-term contracts and whose contract was terminated could bring a claim of unfair dismissal despite the fact that he was employed to work outside Great Britain. Territorial limitations to unfair dismissal rights should be modified where necessary to enable a right emanating from European law to be enforced.

Mr Duncombe was employed by the Secretary of State for Children, Schools and Families (the Department), under a series of fixed-term contracts, to work as a teacher in a school in Germany for children of staff working in European Community institutions. According to his offer letter, the law of choice and jurisdiction was English law. The Department terminated his employment in compliance with a rule, known as the “nine-year rule”, established under the Schools Convention and school staff regulations, under which teaching posts were subject to a maximum of nine years’ duration. Mr Duncombe claimed unfair dismissal and wrongful dismissal.

Under reg.8 of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (2002 SI 2002/2034), where an employee has been continuously employed on successive fixed-term contracts for four years or more, he or she automatically achieves permanent status, unless there is an objective reason justifying a further renewal for a fixed term. Employees who have achieved permanent status under reg.8 may bring claims of unfair dismissal under s.94(1) of the Employment Rights Act 1996 if their contract is terminated. The 2002 Regulations implement the Fixed-term Workers Directive (99/70/EC). The key issue was whether Mr Duncombe was employed under a fixed-term contract with an objectively justified nine-year duration or the 2002 Regulations converted his previous contracts into a permanent contract, entitling him either to continue working or to claim unfair and wrongful dismissal on termination.

The employment tribunal and Employment Appeal Tribunal (EAT) agreed that the Department could not objectively justify the nine-year rule. The 2002 Regulations and the Directive prevailed over the Schools Convention and staff regulations. However, the employment tribunal held that Mr Duncombe could not bring a claim for unfair or wrongful dismissal because the 2002 Regulations have no extra-territorial application to convert the fixed-term contract into a permanent contract. The Regulations were subject to the same implied territorial limitations applied in Serco Ltd v Lawson; Botham v Ministry of Defence; Crofts and others v Veta Ltd and others [2006] IRLR 289 HL, in which the House of Lords gave guidance on deciding whether or not an individual is employed in Great Britain. If the employee is not actually working in Great Britain there must be a sufficiently strong connection with an employer based in Great Britain. The tribunal held that Mr Duncombe did not fall within any of the exceptions to territorial jurisdiction outlined in Serco. Therefore his claim could not proceed. The EAT rejected Mr Duncombe’s appeal in relation to unfair dismissal, but allowed his appeal in relation to wrongful dismissal, on a ground established in Bleuse v MBT Transport Ltd and another [2008] IRLR 264 EAT. In Bleuse, an employee who was not based in Great Britain was able to pursue a claim for unpaid holiday pay because the right to paid annual leave under the working time rules implements a directly effective European right that domestic courts must seek to enforce. Mr Duncombe appealed against the finding on unfair dismissal. The Department appealed against the finding on wrongful dismissal.

The Court of Appeal upheld the tribunal and EAT decisions in relation to objective justification. That the Department had no choice in the matter of the nine-year rule did not excuse it from having to justify it. The Court of Appeal dismissed the Department’s appeal in relation to Mr Duncombe’s wrongful dismissal claim. The Court held that the Serco principles do not limit the territorial scope of the 2002 Regulations in relation to contract issues. It held that the Regulations apply to all relevant contracts governed by English law (which was chosen by the parties to govern Mr Duncombe’s contract), regardless of where they are performed. There was no express provision in the Regulations or the contract itself limiting its territorial application. Therefore, his fixed-term contract was converted into a permanent one. However, if the Serco principles do apply to the Regulations, the Bleuse principle also applies to rights arising from the Directive and the Regulations.

In relation to the unfair dismissal claim, the Court of Appeal said that the Serco principles do apply to unfair dismissal claims. The tribunal was correct to find that Mr Duncombe did not fall within the territorial exceptions in Serco. However, his appeal succeeded on the Bleuse principle. The principle of the effectiveness of EC law is fundamental and requires that the territorial limitations imposed by domestic legislation on unfair dismissal rights should be modified where necessary to enable a right derived from European law to be enforced. Mr Duncombe’s right, under Regulations made to implement a Directive, for his fixed-term contract to become permanent, was not effective if he was dismissed when the fixed-term contract expired. If he had no remedy because he worked outside Great Britain, he would have no remedy for the denial of a right derived from European law. His appeal was allowed.

Case transcript of (1) Duncombe and others (2) Fletcher v Secretary of State for Children, Schools and Families (on the BAILII website)

Go to HR & Compliance Centre case law stop press.