The People Bulletin

The issue of whether Britons working overseas can bring discrimination claims against their home employer was considered – and ducked – in a Supreme Court decision[1] last March  This case – involving Mr Duncombe, a British teacher at a European School in Germany – was our best hope yet for some definitive guidance on this complex issue.

The problem we face is that neither the Employment Rights Act nor the Equality Act – the two mainstays of our employment legislation – include express provisions about their territorial scope. That doesn’t matter in the vast majority of cases. But in an increasing minority of cases, where employees with some connections with a British employer are working overseas, we have to rely on a complex web of international treaties, EU legislation and case law to find the answer.

Looking to the past

Before it was replaced by the Equality Act in October 2010, all our main discrimination legislation had express provisions about territorial scope. Subject to limited exceptions, a worker could only bring a claim if the employer was British-based and he or she worked “wholly or partly” in Great Britain. Disputes have sometime arisen about the meaning of this test, but tribunals have normally leaned in favour of allowing claims in. Most recently the Court of Appeal[2] has confirmed that Hong Kong-based cabin crew working for BA could bring age and sex discrimination claims in England. This was even though they were foreign nationals employed on local law contracts and only spent limited 'turnaround' time in the UK.

A similar test applied for unfair dismissal claims, before it was removed from the Employment Rights Act to ensure it was compatible with the Posted Workers Directive. However five years ago the House of Lords laid down guidance to similar effect in Serco v Lawson[3]. It said that as a general rule the employment had to be in Great Britain, but it was prepared to make exceptions for a limited class of expatriate employees: for example those working in a British enclave abroad, or peripatetic employees with a base in the UK.

The impact of the EU

A number of recent cases – including that of Mr Duncombe – have suggested that this relatively straightforward approach may not reflect the obligations imposed indirectly on our domestic courts by EU legislation.

This is best illustrated by MOD v Wallis[4], another decision of the Court of Appeal. This concerned spouses of British servicemen employed by the MOD as dependent civilians while their husbands were based in Belgium. The MOD dismissed them when their spouses left the armed services. The Court of Appeal confirmed that an English employment tribunal had jurisdiction to hear their unfair dismissal and sex discrimination claims, even though their employment was wholly outside Britain from beginning to end.

This conclusion was particularly surprising in relation to the sex discrimination claims. The tribunal had concluded that to prevent the two women from bringing a claim in England would be to deny them an effective remedy under the Equal Treatment Directive, the underlying EU legislation. In such circumstances the Court of Appeal confirmed that the tribunal was entitled to interpret the Sex Discrimination Act to ensure that it was compatible with the Directive – or, to put it another way, to ignore its express wording on territorial scope. Given that they had breach of contract claims too, which could only be brought in England, the Court of Appeal wanted to avoid claims running in two different jurisdictions. In addition, the MOD was unable to confirm that it would not rely on state immunity to defeat the women’s claims if they brought proceedings in the Belgian courts!

Still searching for the holy grail

The facts of MOD v Wallis were too unusual to provide general guidance, and in any case centred round legislation that has now been repealed. The point of particular interest in Mr Duncombe’s case was that it involved the Fixed-term Employees Regulations 2002, which like the Equality Act, contain no express provisions on territorial scope. So the Supreme Court had a clean slate to work with. In addition, it was a test case involving many other teachers in European Schools, so it would have been worth putting some time into creating general guidance.  Unfortunately the Supreme Court decided (unlike all the lower courts) that there had been no breach of the Fixed-term Regulations and hence no need to delve into complex arguments about their territorial scope.

Looking to the future, it is reasonably clear that the protection against discrimination for employees working abroad cannot go backwards.  That is because member states are not allowed to use the implementation of EU legislation as an opportunity to undo domestic rights which are more favourable. So if an employee is working for a British company, has strong connections with Britain, and is bringing a claim to enforce a right underpinned by EU law, then he or she is likely to be able to bring a claim in Britain even in the absence of express wording in the Equality Act. However, there are a large number of variables that could make a difference including whether the employer is in the public or private sector, and whether or not the contract of employment is governed by English law.

It is much more difficult to forecast the answer for other categories of cross-border workers, and for workers working outside the EU. But to be fair to the Supreme Court, the facts before it would not have enabled it to offer guidance on these issues anyway.  In addition it has reserved judgment on the issue of whether Mr Duncombe has a free-standing claim for unfair dismissal that he can bring in England, and it is possible that this will lead to some further liberalisation of the Serco guidelines for such claims.

[1] www.bailii.org/uk/cases/UKSC/2011/14.html

[2] www.bailii.org/ew/cases/EWCA/Civ/2011/184.html

[3] www.bailii.org/uk/cases/UKHL/2006/3.html

[4] www.bailii.org/uk/cases/UKHL/2006/3.html