Ministry of Defence v Wallis and Grocott

The Court of Appeal dismissed the Ministry of Defence's appeal and held that the Employment Tribunal had jurisdiction to hear the claimants' unfair dismissal and (in Mrs Wallis's case) sex discrimination claims. On unfair dismissal the court applied the test in Serco: the claimants' employment fell within Lord Hoffmann's residual class of expatriate employees because their employment was recruited, governed and terminated by the MoD on English terms and had a sufficiently strong connection with Great Britain. On sex discrimination the court accepted that the Sex Discrimination Act 1975 (notably ss.6 and 10) did not on its face cover employment wholly abroad, but held that directly enforceable rights under the Equal Treatment Directive could be vindicated in the UK by either compatible construction of s.10 or by disapplying inconsistent domestic limitations to secure effective judicial protection.

This appeal arose from two claims brought by women who were engaged by the Ministry of Defence to work overseas in schools attached to NATO headquarters. Each claimant obtained her post because she was a dependent of a serving UK armed forces member stationed at an international NATO facility. The MoD dismissed both claimants when their spouses ceased to be employed by the MoD. The claimants brought breach of contract, unfair dismissal and, in Mrs Wallis's case, a sex discrimination claim.

The MoD challenged the Employment Tribunal's jurisdiction on the basis that the claimants worked wholly abroad and so fell outside the territorial scope of the Employment Rights Act 1996 (Part X) and the Sex Discrimination Act 1975 (notably s.6 and s.10). The Employment Tribunal found in favour of the claimants on jurisdiction, concluding their employment had clear and strong connections with Great Britain. The Employment Appeal Tribunal dismissed the MoD's appeal and the MoD obtained permission to appeal to the Court of Appeal.

Issues before the Court of Appeal

• Whether, applying Serco, the claimants had sufficiently strong connections with Great Britain to fall within the territorial scope of the unfair dismissal regime in the Employment Rights Act 1996.
• Whether Mrs Wallis could enforce rights derived from the Equal Treatment Directive in a UK tribunal despite the territorial limitations of the Sex Discrimination Act 1975.

Reasoning

• On unfair dismissal the court held that the Employment Tribunal had permissibly and reasonably found a cumulative set of connecting factors: recruitment and employment by the MoD, eligibility as dependents of UK service personnel, English law terms and conditions, the MoD policy of employing dependents, and dismissal consequent on loss of dependent status. Those factors were sufficient to bring the claimants within Lord Hoffmann's residual category in Serco.
• On sex discrimination the court accepted that s.6 and s.10 of the 1975 Act did not, on their face, extend to employment wholly abroad. However, because Mrs Wallis relied on directly enforceable rights under the Equal Treatment Directive, national courts must secure effective judicial protection. The domestic statute must, so far as possible, be construed compatibly (Litster/Marleasing) or, if not possible, disapplied so that the Directive right can be vindicated in the UK tribunal.

The Court emphasised that the outcome was driven by statutory construction of domestic legislation together with principles of EU law (direct effect and effective judicial protection) and affirmed the EAT and Employment Tribunal conclusions.

Appeal dismissed. The Employment Tribunal had not erred in law: the claimants' employment had sufficiently strong connections with Great Britain to attract protection under the unfair dismissal provisions of the Employment Rights Act 1996 (Serco class (iii) applied). Mrs Wallis could pursue sex discrimination rights derived from the Equal Treatment Directive in the UK tribunal by compatible construction of, or by disapplying inconsistent parts of, the Sex Discrimination Act 1975 to ensure effective judicial protection.

Employment Tribunal decision: ET sent to parties 7 October 2008 (Employment Judge). Employment Appeal Tribunal (Underhill J, UKEAT/0546/08/ZT) dismissed the MoD's appeal 29 July 2010. Permission to appeal to the Court of Appeal granted by Elias LJ on 7 October 2010. Court of Appeal judgment: [2011] EWCA Civ 231 (08 March 2011).