Serco Limited (Respondents) v. Lawson (Appellant) Botham (FC) (Appellant) v. Ministry of Defence (Respondents) Crofts (Respondent) and others v. Veta Limited (Appellants) and others and one other action

The territorial scope of the right not to be unfairly dismissed under section 94(1) of the Employment Rights Act 1996 is determined by construing that provision, rather than by applying a supplementary formula or judicial discretion. The paradigm case is an employee working in Great Britain when dismissed. A peripatetic employee is treated as working at the place where the employment is based. An employee working and based abroad is protected only exceptionally, where the employment has equally strong connections with Great Britain and British employment law. Relevant examples include an employee posted abroad as the representative of a business conducted in Great Britain and an employee working within a British political or social enclave abroad. Territorial scope is a question of law, although the tribunal’s evaluation of the primary facts deserves considerable respect.

These conjoined appeals concerned three employees claiming unfair dismissal under section 94(1) of the Employment Rights Act 1996. In Lawson v Serco Ltd, a British employee of a British company worked as a security supervisor at an RAF base on Ascension Island. The Court of Appeal held that the provision did not apply because all his services were performed abroad: [2004] EWCA Civ 12; [2004] ICR 204.

In Botham v Ministry of Defence, a UK-based civilian youth worker employed by the Ministry worked with British forces in Germany. The Employment Appeal Tribunal and Court of Appeal followed the decision in Lawson v Serco Ltd. The Court of Appeal decision was [2005] EWCA Civ 400.

In Crofts v Veta Ltd, a pilot employed by a Hong Kong company performed peripatetic duties but had Heathrow as his permanent home base. The Court of Appeal held by a majority that section 94(1) applied: [2005] EWCA Civ 599; [2005] ICR 1436. The common question was what connection between Great Britain and an employment relationship makes section 94(1) applicable despite foreign elements.

1. Disposition. Lord Hoffmann delivered the leading speech. Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Baroness Hale of Richmond expressly agreed with his reasons, while Lord Woolf agreed with the orders. The House unanimously dismissed the appeal in Crofts v Veta Ltd and allowed the appeals in Lawson v Serco Ltd and Botham v Ministry of Defence.

2. Construction and jurisdiction. Per Lord Hoffmann, the territorial scope of section 94(1) of the Employment Rights Act 1996 is a question of statutory construction. The provision is not worldwide in scope, and its implied territorial limits must give effect to Parliament’s rational legislative intention. No supplementary verbal rule should be inserted into the section. Nor does a tribunal possess a discretion to stay a qualifying claim on grounds of forum non conveniens, because no foreign tribunal can determine the statutory claim created by section 94(1).

3. The paradigm case. Per Lord Hoffmann, the normal case is an employee working in Great Britain when dismissed. The actual operation of the employment at that time is ordinarily more important than the place of recruitment or what the original contract contemplated. Contractual terms and employment history remain relevant where they show that presence in Great Britain was merely casual or formed part of duties based elsewhere.

4. Peripatetic employees. Per Lord Hoffmann, a peripatetic employee is treated as working at the employment base. The base is identified from the parties’ conduct and the way the contract was operating at the material time. Mr Crofts’s tours began and ended at Heathrow, and London was the centre of his operations. He was therefore based in Great Britain, and Veta’s appeal was dismissed. Whether the statutory territorial requirement is met is a question of law, although the primary fact-finder’s evaluative conclusion deserves considerable respect.

5. Expatriate employees. Per Lord Hoffmann, circumstances must be exceptional before an employee working and based abroad falls within section 94(1). Employment by a British-based employer will ordinarily be necessary but is insufficient by itself. British ownership, nationality or recruitment in Britain also does not suffice. Protection may apply where an employee is posted abroad as the representative of a business conducted in Great Britain, or works within a political or social British enclave abroad. Any further category would require equally strong connections with Great Britain and British employment law.

6. Application and final orders. Per Lord Hoffmann, the British military establishment in Germany placed Mr Botham within the enclave category. The RAF base on Ascension Island was, in practical terms, a British outpost without a local community, and the connections of Mr Lawson’s employment with the United Kingdom were overwhelmingly stronger. Their cases were remitted to the Employment Tribunals for hearings on the merits. Lord Hoffmann added that any foreign compensation obtained by an expatriate employee must be taken into account to prevent double recovery.

1. House of Lords: In Serco Ltd v Lawson; Botham v Ministry of Defence; Crofts v Veta Ltd [2006] UKHL 3, the House unanimously allowed the Lawson and Botham appeals, remitted those claims to the Employment Tribunals, and dismissed Veta’s appeal in Crofts.
2. Court of Appeal—Lawson: In Lawson v Serco Ltd [2004] EWCA Civ 12; [2004] ICR 204, the court held that section 94(1) did not apply where all services were performed abroad. That decision was reversed.
3. Court of Appeal—Botham: In Botham v Ministry of Defence [2005] EWCA Civ 400, the court followed Lawson. That decision was reversed.
4. Court of Appeal—Crofts: In Crofts v Veta Ltd [2005] EWCA Civ 599; [2005] ICR 1436, the majority held that the employee’s British base brought the employment within section 94(1). That decision was affirmed.