Ministry of Defence v Holloway & Ors (Jurisdictional Points)

Employment legislation does not ordinarily apply to work outside the United Kingdom. Its territorial reach depends on whether the employment relationship has a sufficiently strong connection with both the United Kingdom and United Kingdom employment law.

That fact-sensitive assessment must identify the law which directly governs the contract. Where employment in a Sovereign Base Area is governed by that territory’s law, the incorporation of English common-law principles does not mean that English law governs the contract. A material error on that issue invalidates the overall territorial assessment and requires reconsideration.

Nineteen locally recruited civilian employees of the Ministry of Defence worked in the Sovereign Base Areas in Cyprus. They were dependants of service personnel or United Kingdom-based civil servants posted there. They alleged race and marital-status discrimination in comparisons with other locally employed civilians.

Employment Tribunal: The Employment Judge held that the Equality Act 2010 applied because the employees had a stronger connection with Britain and British law than with Sovereign Base Area law.

Employment Appeal Tribunal: The Ministry appealed. The central issue was whether the Judge had erred in treating English law, rather than Sovereign Base Area law, as governing the contracts when assessing the Act’s territorial reach.

1. Appeal allowed and remitted. The Employment Judge’s conclusion on territorial jurisdiction could not stand because it was materially influenced by an erroneous conclusion that it made no difference whether English law or Sovereign Base Area law governed the contracts.

2. The applicable test, drawn from Lawson, Duncombe and Ravat, asks whether the employment relationship has a sufficiently strong connection with the United Kingdom and United Kingdom employment law. Work outside the United Kingdom is the starting point. The issue is fact-sensitive and depends on the weight properly given to the rival connections.

3. The locally employed civilians’ contracts were governed directly by the law of the Sovereign Base Areas. That law could require application of principles familiar to English common law, but those principles applied because Sovereign Base Area law adopted them. They did not apply because English law governed the contracts. The assessment also had to take account of the whole of Sovereign Base Area law, including its Ordinances.

4. The Claimants were not members of the “civilian component” for the relevant Treaty and Ordinance provisions. They were locally engaged civilians. Cap 149 did not bind the Crown by necessary implication.

5. The Tribunal was not bound to conclude that the Equality Act 2010 could not apply. There were competing factors capable of supporting either conclusion. Since the legal error was material, the territorial-reach question was remitted to the same Employment Judge for fresh determination.

• Employment Appeal Tribunal: Allowed the Ministry’s appeal and remitted the territorial-reach issue under the Equality Act 2010 to the same Employment Judge.
• Employment Tribunal: Held that the Claimants’ employment relationship had a sufficiently close connection with Britain and British law for the Tribunal to have jurisdiction.