New territory

Mr Duncombe was employed by the secretary of state for children, schools and families (the department) as a teacher to work in a European school in Germany. The majority of  teachers seconded to the school were centrally employed by the state.

However, teachers from the UK were usually employed by the local authority or by the school’s governing body. The prevailing Staff Regulations limits, save in exceptional circumstances, a secondment to nine years whereafter the secondment terminates.

Duncombe was employed on successive fixed term contracts, between January 1996 and September 2006 and commenced proceedings alleging unfair and wrongful dismissal following the expiration of his final fixed term contract.

The fundamental issue for determination was whether his contract of employment is to be viewed as a fixed term employment contract with an objectively justifiable maximum term of nine years or whether the contract was converted by virtue of the Fixed-Term Employees (Prevention of less Favourable Treatment) Regulations 2002 (SI 2002/2034) (The 2002 Regulations) into a permanent contract thereby entitling him to continue working or upon termination obtain redress for unfair and wrongful dismissal.

The employment tribunal (ET) and the Employment Appeal Tribunal (EAT) held that the ET did not have jurisdiction to consider an unfair dismissal claim because of the absence of a “substantial connection,” as set out by Lord Hoffmann in Daley v Serco Home Affairs Ltd and others [2010] All ER (D) 22 (Jan). The EAT, however, overturned the ET’s finding that it did not have jurisdiction to consider Duncombe’s wrongful dismissal claim.
Duncombe appealed against the finding in relation to unfair dismissal and the department appealed the EAT’s ruling in relation to wrongful dismissal.

Relevant legal regimes

In determining the issues, the CA identified the relevant legal regimes as being the Staff Regulations 1996 (the 1996 Regulations) and the 2002 Regulations (Duncombe v Secretary of State for Children, Schools and Families [2009] EWCA Civ 1355, [2009] All ER (D) 134 (Dec)). The Schools Convention 1994 (the Convention) created the constitution and governance of the European schools and was made between the member states and the communities themselves. The 1996 Regulations, set out the rules regarding the secondment of staff and, inter alia, limited the term of appointment to a maximum of nine years.

The outcome of the appeal depended largely upon the answer to the question: did the employment contract fall within the scope of the Fixed Term EC Directive 1999/70/EC (the Directive) which spawned the 2002 Regulations and if so, was the nine-year rule objectively justified. If not, was the Convention and the 1996 Regulations trumped by the Directive and the 2002 Regulations.

The appeal

The department, inter alia, contended that:
(i) Neither the Directive or the 2002 Regulations were relevant because the contract reflecting the nine-year rule fell outside the ambit of the 2002 Regulations and the Directive. Accordingly, the issue of objective justification as regards the use of a fixed-term contract did not arise and therefore Duncombe did not become a permanent employee.
(ii) The nine-year rule prevented the secondment being permanent.
(iii) The contractual extensions of Duncombe’s contract did not amount to an abuse, as envisaged by the Directive.

On appeal, Duncombe contended that, by virtue of the 2002 Regulations, by the time his employment terminated his contract transmuted into a permanent contract and therefore he was entitled to pursue his unfair and wrongful dismissal claims.

As regards the department’s submission regarding the scope of the Directive and the 2002 regulations, the CA considered this to be a novel point not previously relied on by the department. However, because of the importance of the issues raised concerning the rights of teachers the CA considered the submissions.

The department averred that the 2002 Regulations was concerned with cases where successive fixed term contracts were deployed in circumstances where the actuality of the situation was one of permanency: whereas in the present case it was the operation of the nine year rule that prevented the employee becoming permanent.

It was further contended that Duncombe argued for the secondment to be extended to enable him to continue to work in the school rather than to secure continued employment with the department. Moreover, the department contended that it was unable to extend the period because it was not responsible for the running of the school and therefore did not have the power to force the school to accept the seconded teachers beyond the maximum nine year period.

The CA sought to give the 2002 Regulations their ordinary meaning having regard to the context and the purpose of the said Regulations. In this regard, LJ Mummery, considered the meaning of the term “purporting to be” a fixed term contract. The Court of Appeal (CA) rejected the department’s submission that reg 8 is only satisfied if it can be shown that the contract was tantamount to a sham. Mummery LJ opined that a contract can properly be described as “purporting to be” a fixed term contract if it in fact states that it is such a contract and provides for a fixed term. The word “purport” includes being, or conveying that it is, what it professes to be, whether or not it may turn out to be something else.

Unfair & wrongful dismissal

By the time Duncombe’s appeal came to be heard the EAT’s decision in Bleuse had been promulgated (Bleuse v MBT Transport Limited and Tiefenbacher (Debarred) UKEAT/0339/07). In Bleuse the employee, a German National living in Germany, was employed by a British company and worked mainly in Germany and Austria. The employment contract provided that English law and jurisdiction was applicable. Following the termination of his employment, the employee commenced proceedings in the ET for holiday pay. The ET declined jurisdiction because the employee was not based in the UK, thus leaving the employee without an effective remedy in respect of his directly effective EC rights under the Working Time Regulations.

In the absence of an express territorial limitation on the scope of the Working Time Regulations any limitation had to be implied. Mummery LJ said, reciting the judgment in Bleuse that “…in circumstances where...English law is the proper law of the contract…an English court properly exercising jurisdiction must seek to give effect to directly effective rights derived from an EU Directive by construing the relevant English statute, if possible, in a way which is compatible with the right conferred”.

Serco principles

LJ Mummery considered that the issue to be determined is whether the Serco principles on the limits to the territorial reach of the unfair dismissal provisions applied to the 2002 Regulations and if so, whether Duncombe’s case is unusual enough for his right to claim an indefinite contract and unfair dismissal is unaffected by the fact that he worked outside Great Britain throughout the duration of the contract. Moreover, if he is unable to rely on the Serco principles, whether the Bleuse principles applied so as to provide an effective remedy.

LJ Mummery held that reg 8 transmuted a fixed term contract into a permanent contract and therefore the fact that the contract was to be performed outside GB did not prevent that change in the contract. In which case, the Serco principles are irrelevant. Accordingly, the performance of the contract outside of Great Britain is irrelevant to the breach of contract claim.
In applying the Bleuse principle LJ Mummery observed that, by enacting the 2002 Regulations the relevant part of the Directive became directly effective for the purpose of engaging the principle of effectiveness.

Thus, member states are obliged to make rights under the Directive effective by providing an effective domestic law forum for enforcement, which can be done by modification, if necessary, to the extra-territorial limitations, which erect a barrier to the enforcement of EC rights. Accordingly, the Bleuse principle applied to Duncombe’s wrongful dismissal claim.

Now turning to the unfair dismissal claim, on the basis that reg 8 is applicable to Duncombe’s contract the effect of this is that, his contract changed to a permanent contract. However, in this context this would not per se suffice to pursue an unfair dismissal claim which is subject to implied territorial limitations. In this regard, Mummery LJ held that the ET’s decision cannot be said to be perverse.

Mummery LJ concluded that the Bleuse principle applied to unfair and wrongful dismissal and the principle of effectiveness in EC law required the “implied territorial limitation in domestic law, as identified in Serco, on the right not to be unfairly dismissed should be modified to permit such a claim to be made where that is necessary for the effective vindication of a right derived from EC Law”.

Moreover, LJ Mummery noted that the only reason for Duncombe’s dismissal was the expiration of his contract. However, because the contract became a permanent contract, in respect of which an unfair dismissal claim could be pursued, to deny him such a remedy because he worked outside of GB would leave him without a remedy for the denial of an EC derived right. Therefore, it was “necessary” for him in such circumstances to have that remedy if his EC right is to have an effect. Accordingly, Duncombe’s appeal was upheld.

It is apparent from this decision and Serco that, where necessary to give effect to EU derived rights eg national minimum wage, health and safety, the court will be prepared to extend the reach of employment rights to employees beyond the seas. In particular, in circumstances where the employee would otherwise be left without an effective remedy to enforce his right.

David Tyme, head of employment, Webster Dixon Solicitors

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