Duncombe & Ors v Secretary of State for Children, Schools & Families

This appeal concerned whether teachers seconded to the European Schools were protected by the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (implementing Council Directive 1999/70/EC) so that successive fixed-term contracts became contracts of indefinite duration under regulation 8 unless the fixed-term employment was justified on objective grounds, and related questions about the territorial scope of domestic employment rights. The court held that regulation 8 applies to contracts that "purport to be" fixed-term contracts governed by English law and that a contract is "purporting to be" fixed-term if it so provides; the burden of proving objective justification for the Nine Year Rule lay on the employer and the Employment Tribunal was entitled to find the employer had not discharged that burden. The court also held that regulation 8 operates to change the substantive contractual position (so that a wrongful dismissal action is available under English law for contracts governed by English law even if performed abroad), but that the statutory unfair dismissal jurisdiction under section 94(1) of the Employment Rights Act 1996 remains subject to the territorial limitations identified in Serco; those limitations, however, must be modified by the principle in Bleuse (principle of effectiveness) where necessary to give effect to directly effective Community rights. The end result was that the Secretary of State's appeal was dismissed in relation to Fletcher and was dismissed in part in relation to Duncombe, whose appeal on unfair dismissal succeeded because the principle of effectiveness required an effective remedy.

This Court of Appeal judgment arises from test cases brought by British teachers seconded to European Schools, challenging the application of the Schools' internal "Nine Year Rule" and seeking declarations that successive fixed-term appointments had become permanent under the Fixed-Term Regulations 2002. The employers were the Secretary of State for Children, Schools and Families (the Department). The litigation travelled from Employment Tribunals to the Employment Appeal Tribunal and to this Court.

Background and parties:

• The claimants (including Mr KP Duncombe and Mr JR Fletcher) had been seconded by the Department to posts at European Schools subject to Articles 28–29 of the Staff Regulations (the "Nine Year Rule").
• The claimants relied on Council Directive 1999/70/EC (the Fixed-Term Directive) and its domestic implementation in the Fixed-Term Regulations 2002, in particular regulation 8 (conversion to permanent employment where successive fixed-term contracts total four years or more and the employer cannot objectively justify the fixed-term employment).
• The Department contended that the Directive/Regulations did not apply to these secondments, or alternatively that the Nine Year Rule was objectively justified, and argued for territorial limits on domestic remedies for those working outside Great Britain following Serco.

Nature of claims and procedural posture:

• The principal remedies sought were declarations of permanent status under regulation 8 and consequential wrongful dismissal and/or unfair dismissal claims when secondments ended.
• The Employment Tribunals and Employment Appeal Tribunal decided (broadly) that the Fixed-Term Regulations applied, that the Department had not shown objective justification, and that regulation 8 could convert the contractual position; on extra-territorial claims the tribunals applied Serco principles but the EAT accepted a Bleuse-type effectiveness point in relation to some claims.
• The Department appealed to the Court of Appeal and sought to introduce a new primary argument that the Directive/Regulations did not apply at all to these arrangements.

Issues framed:

• Whether the Fixed-Term Directive and the Fixed-Term Regulations apply to the claimants' secondments (interpretation and scope of regulation 8).
• If they apply, whether the Nine Year Rule is objectively justified (burden on employer; scope of evidence and proper legal test).
• The effect of the Schools Convention and Staff Regulations: whether they displace or override the Directive/Regulations.
• Territorial scope: whether regulation 8 and the unfair dismissal jurisdiction apply to employees who perform contracts abroad (interaction with Serco) and whether the Bleuse/principle of effectiveness requires modification of territorial limits to give effect to Community rights.

Court's reasoning and conclusions:

• The court permitted the Department to run the late scope point but rejected it on construction: a contract "purporting to be" fixed-term is one that on its face provides for a fixed term; the purpose and ordinary meaning of regulation 8 bring the teachers' contracts within the Regulations. Consequently the new preliminary point failed and the tribunal and EAT were right to proceed to objective justification.
• On objective justification the court held the employer bore the burden and the Employment Tribunal's factual findings that the Department had not proved justification were not perverse; the Department could not rely simply on the existence of the Nine Year Rule or on international treaty status to avoid domestic obligations.
• The court concluded that regulation 8 operates to change the substantive contractual position for contracts governed by English law irrespective of where performance occurs, so that common law wrongful dismissal remedies remain available in contract for employees governed by English law. For statutory unfair dismissal under s94(1) the Serco principles as to territorial scope apply; however, where necessary to provide an effective remedy for rights derived from Community law, the Bleuse principle (principle of effectiveness) modifies those limits so that an employee like Duncombe could pursue an unfair dismissal claim.
• The court found no need to refer questions to the Court of Justice.

The Court of Appeal allowed the appeals in part. It dismissed the Secretary of State's appeal in Mr Fletcher's case (upholding the Employment Tribunal's finding that regulation 8 applied and that the Nine Year Rule was not objectively justified). In Mr Duncombe's case the court upheld the EAT's decision allowing his wrongful dismissal appeal (concluding regulation 8 applies to contracts governed by English law even if performed abroad) and allowed his appeal on unfair dismissal on the basis that the Bleuse/principle of effectiveness requires a domestic remedy to vindicate the Community-derived right; the Serco territorial principles apply to statutory unfair dismissal but must yield where effectiveness of EC rights would otherwise be undermined. The court dismissed the Department's arguments that the Schools Convention or Staff Regulations displaced the Fixed-Term Directive/Regulations and did not refer questions to the Court of Justice.

Appeal to the Court of Appeal from decisions of the Employment Appeal Tribunal and the Employment Tribunal (EAT references UKEAT/0095/08/RN & UKEAT/0433/07/dm are recorded in the transcript). The Employment Tribunal decisions (on test cases) were considered and some were upheld on appeal to the EAT; this Court of Appeal decision is reported at [2009] EWCA Civ 1355.