Duncombe v Secretary of State for Children, Schools and Families (No 2)

The Supreme Court allowed the teachers' cross-appeal and remitted the cases to the Employment Tribunal. The key legal principle applied was the Lawson v Serco Ltd approach to the territorial reach of section 94(1) of the Employment Rights Act 1996: the right not to be unfairly dismissed can exceptionally apply to employees working abroad where the employment relationship has an overwhelmingly closer connection with Great Britain and British employment law than with any other legal system. The Court held that the combination of factors in these cases — employment by the United Kingdom government, contracts governed by English law, work in international enclaves governed by international agreements, absence of local labour law protection and tax links — produced that overwhelmingly close connection and brought the teachers within section 94(1).

Background and parties:

• The claimants were teachers employed by the Secretary of State for Children, Schools and Families to work in European Schools abroad.
• The Secretary of State was the appellant in the main appeal and the respondent in the cross-appeal; the teachers were respondents in the main appeal and appellants in the cross-appeal.

Procedural history: The case came to the Supreme Court on appeal from the Court of Appeal ([2009] EWCA Civ 1355). The Court had earlier delivered a separate judgment in the same litigation on 30 March 2011 dealing with the Fixed-term Employees Regulations ([2011] UKSC 14) and reserved judgment on the teachers' cross-appeal concerning unfair dismissal protection under section 94(1) of the Employment Rights Act 1996.

Nature of the claim and relief sought: The cross-appeal concerned whether the teachers were protected by the statutory right not to be unfairly dismissed under section 94(1) of the Employment Rights Act 1996. The relief sought was a declaration that their employment fell within section 94(1) and therefore that they had protection against unfair dismissal.

Issues framed by the Court:

• Whether the Lawson v Serco Ltd principle (the exceptional application of section 94(1) to employees working abroad) applied to these teachers.
• Whether the combination of factors in their employment established an "overwhelmingly closer connection" with Great Britain and British employment law than with any other legal system.

Court’s reasoning and subsidiary findings:

• The Court applied the Lawson v Serco framework: the statutory protection is normally for employees working in Great Britain, but exceptionally may apply where the employment relationship has much stronger connections with Great Britain and its employment law.
• The Court identified a constellation of factors that, cumulatively, establish an overwhelming connection: the employer was the United Kingdom government (sine qua non); contracts were governed by English law; terms and conditions were essentially English or derived from the international institutions for which they worked; the teachers worked in international enclaves under international agreements and not under the labour laws of the host states; they did not pay local taxes; and their presence abroad derived from commitments undertaken by the United Kingdom government.
• The Court distinguished these teachers from locally engaged "directly employed labour" (who are governed by local law and taxes) and treated the cases as analogous to other exceptional examples recognised in Lawson and in Ministry of Defence v Wallis and Grocott.
• The Court concluded that Parliament must have intended that employees with such overwhelmingly close connections to Great Britain enjoy the protection of section 94(1).

Disposition: The cross-appeal was allowed and the cases remitted to the Employment Tribunal; the Ministry of Defence's application for permission to appeal in Wallis and Grocott was dismissed.

The cross-appeal was allowed. The Court held that, on the established Lawson v Serco principle, the teachers' employment had an overwhelmingly closer connection with Great Britain and British employment law than with any other legal system, for reasons including that their employer was the United Kingdom Government, their contracts were governed by English law, they worked in international enclaves under international agreements rather than under host state labour law, and they did not pay local taxes. For those reasons the teachers fell within section 94(1) of the Employment Rights Act 1996 and the matters were remitted to the Employment Tribunal.

On appeal from the Court of Appeal [2009] EWCA Civ 1355. The Supreme Court had earlier given a separate judgment in the related proceedings on 30 March 2011 ([2011] UKSC 14) dealing with the Fixed-term Employees Regulations and reserved judgment on the cross-appeal now decided.