Serco Ltd v Lawson

The House of Lords decided the territorial scope of section 94(1) of the Employment Rights Act 1996 (the right not to be unfairly dismissed). The court held that the Act is prima facie territorial and that some implied territorial limits must be read into section 94(1). The normal or standard case in which section 94(1) applies is where the employee is working in Great Britain at the time of dismissal. For peripatetic employees the relevant inquiry is where the employee is based. Exceptional expatriate cases may fall within section 94(1) where the employment has a particularly close connection with Great Britain, for example where the employee is posted abroad as part of a business carried on in Great Britain or where the employee works in what is for practical purposes a British enclave abroad (such as a military base). The court applied these principles to the three appeals: it dismissed the appeal in Crofts (employee based in Great Britain — jurisdiction upheld) and allowed the appeals in Lawson and Botham (expatriate employees with sufficiently strong connections to Great Britain), remitting those cases for hearings on the merits.

This series of appeals concerned whether an employee who performs services abroad can bring a claim for unfair dismissal under section 94(1) of the Employment Rights Act 1996 and, if so, when an Employment Tribunal has jurisdiction.

Background and facts:

• Lawson v Serco Ltd: Mr Lawson was engaged by a UK company to work as a security supervisor on Ascension Island and claimed constructive dismissal after six months.
• Botham v Ministry of Defence: Mr Botham, UK-based civilian staff of British Forces in Germany, was summarily dismissed and claimed unfair dismissal.
• Crofts v Veta Ltd: Mr Crofts, employed by a Hong Kong company but based at Heathrow under a basings policy, claimed unfair dismissal after dismissal in 2001.

Procedural posture: These matters reached the House of Lords on appeal from the Court of Appeal decisions ([2004] EWCA Civ 12; [2005] EWCA Civ 400; [2005] EWCA Civ 599).

Issues:

• What implied territorial limits, if any, apply to section 94(1) ERA 1996?
• Whether the fact that Parliament repealed section 196 (the prior express territorial limitation) affects the appropriate test.
• How to treat peripatetic and expatriate employees for the statutory territorial scope and whether the Employment Tribunal has jurisdiction.

Reasoning and outcome:

The court found that Parliament's repeal of section 196 removed statutory wording but did not resolve the question of territorial scope; judges must now imply limits by established principles of construction. The court identified the standard case as an employee working in Great Britain at the time of dismissal. For peripatetic employees the place where the employee is based is ordinarily decisive. Expatriate employees may exceptionally fall within section 94(1) where the employment is sufficiently connected with Great Britain — for example where the employee is posted abroad as a representative of a business carried on in Great Britain or where the employee works in an extra‑territorial British enclave (illustrated by a military base or Ascension Island). The House of Lords applied these principles: Crofts was held to be based in Great Britain (appeal dismissed), while Lawson and Botham were held to have sufficiently close connections with Great Britain (appeals allowed) and were remitted to tribunals for merits hearings.

Appeals in Lawson v Serco Ltd and Botham v Ministry of Defence were allowed and remitted for hearing on the merits; the appeal in Crofts v Veta Ltd was dismissed. The court held that section 94(1) ERA 1996 has implied territorial limits: ordinarily it applies where the employee is working in Great Britain at the time of dismissal; peripatetic employees are treated as employed where they are based; expatriate employees may exceptionally be covered where there is a stronger connection with Great Britain (for example, posted by a British employer to represent a British business abroad or working in a British enclave). The repeal of section 196 left the matter to judicial implication but did not require a radical change of approach.

Appeals from the Court of Appeal: Lawson v Serco Ltd [2004] EWCA Civ 12; Botham v Ministry of Defence [2005] EWCA Civ 400; Crofts v Veta Ltd [2005] EWCA Civ 599. Each appeal raised the territorial scope of section 94(1) of the Employment Rights Act 1996 and came to the House of Lords for final determination.