A recent Court of Appeal decision has widened the ambit of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 and the Employment Rights Act 1996 to protect overseas employees. We asked Aisling Byrne, Associate Solicitor, Cleaver Fulton Rankin Solicitors, to set out the background and importance of this case in relation to fixed term employment and territorial jurisdiction.

Regulation 8 of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (“the FTE Regulations”) provides that employees employed for 4 years or more on a series of fixed term contracts are automatically deemed to be permanent employees unless an employer can objectively justify why this should not be the case.

The Court of Appeal in the case of Duncombe and others v Secretary of State for Children, Schools and Families [2009] EWCA has held that employees working abroad can rely on the FTE Regulations to convert their fixed term contracts into permanent ones and claim unfair dismissal where their contracts are stated to be subject to English law.

Facts
Mr Duncombe was employed to teach in a European School in Germany by the Department for Children, Schools and Families. The European Schools were established by the EC and member states for the education of the children of staff working in EC institutions. The Schools are governed by the Schools Convention and Staff Regulations which set out the terms on which staff are employed, one of which being that employment at a European School is limited to nine years (the Nine Year Rule).

Although Mr Duncombe’s contract was stated to be governed by English law he had never worked in the UK and his employment was terminated in accordance with the Nine Year Rule. Mr Duncombe issued proceedings in the UK relying on the FTE Regulations and claiming wrongful dismissal and unfair dismissal. Had he issued proceedings in Germany, the Department would presumably have relied on state immunity.

Decision
1. Did the FTE Regulations apply?
The Court of Appeal held that Mr Duncombe could rely on the FTE Regulations notwithstanding the fact that he did not work in the UK. The Court held that there is no express provision in the FTE Regulations limiting its application territorially. Therefore, the FTE Regulations apply to all relevant contracts governed by English law, irrespective of where the employee works and performs the contract.
The Court also rejected the Department’s argument that the FTE Regulations did not apply as they were designed to deal with abuse of fixed term contracts whereas in this case the contracts were genuine. The Court held that although the legislation was designed to target abuse, it did not necessarily follow that abuse was required for the FTE Regulations to apply.

2. Was the use of a fixed term contract objectively justified?
The Court held that the Nine Year Rule could not be objectively justified. The Court did not uphold the Department’s argument that it had no choice in relation to the application of the Nine Year Rule and held that it was nonetheless required to provide a justification for it but had not done so in this case.
The Court rejected the Department’s argument that it was bound by the Schools Convention and Staff Regulations and held that the FTE Regulations take precedence in English law.
By virtue of Regulation 8 therefore, Mr Duncombe’s fixed term contract was converted into a permanent one.

3. Could Mr Duncombe bring an unfair dismissal claim?
Unfair dismissal claims in England are brought under the Employment Rights Act 1996 (“the Act”). Like the FTE Regulations, the Act is silent as to its territorial scope. Jurisdiction in unfair dismissal claims is therefore governed by the case of Lawson –v- Serco [2006] ICR (“Serco”) which provides that for the Act to apply, employment should be based in the UK and will only apply to employees working or based abroad in exceptional circumstances.

The Court of Appeal decided that in spite of the decision in Serco, the claimants could also claim unfair dismissal to enable them to take advantage of their EU derived rights to a permanent contract under the FTE Regulations. The Court modified the Serco test to allow Mr Duncombe’s case to proceed holding that do otherwise would leave him with “no remedy anywhere for the denial of his EC derived right”.

Summary
This case could now enable employees whose contracts are governed by English law but who work outside England to pursue claims in English employment tribunals in order to provide an effective remedy for breach of a right derived from EC law. To quote Lord Justice Mummery from his judgement “the principle of effectiveness of EC law is fundamental and forceful”.

As this is a decision of the England and Wales Court of Appeal it is not strictly speaking binding in this jurisdiction. However, it will be of persuasive authority and arguably the same principles would be applied in similar cases arising in Northern Ireland under the comparable provisions of the Employment Rights (Northern Ireland) Order 1996 and the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2002.