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Lawson v. Serco, Botham v. Ministry of Defence, Crofts v. Veta [2006] ICR 250


House of Lords

The issue of whether the Employment Rights Act 1996 s.94(1) had the territorial scope to apply to a particular case was simply a question of construction and it would be a mistake to try to formulate an ancillary rule of territorial scope which must then itself be interpreted and applied.

The appellants (L, B and V) appealed against decisions ( Lawson v Serco Ltd (2004) EWCA Civ 12 , (2004) 2 All ER 200 and Crofts v Cathay Pacific Airways Ltd (2005) EWCA Civ 599 , (2005) ICR 1436 ) regarding the territorial scope of the Employment Rights Act 1996 s.94(1) . In L's case, the employer was a substantial United Kingdom company which had engaged L to work as a security guard on Ascension Island. In B's case, the Ministry of Defence had employed B as a UK based youth worker at various MOD establishments in Germany. In V's case, the employee had been employed as a pilot by a Hong Kong company but was based in the UK under a permanent basings policy. The Court of Appeal held that s.94(1) did not apply to L or B as all the services had been performed by the employees abroad. However, in V's case, the Court of Appeal concluded that the employee's basing in the UK was sufficient for the employment tribunal to treat s.94(1) as applicable. The issue for determination was what connection between Great Britain and the employment relationship was required to make s.94(1) the appropriate choice of law in deciding whether an employee could complain that his dismissal was unfair.

HELD: The question in each case was whether s.94(1) applied to a particular case, notwithstanding its foreign elements. That was a question of the construction of s.94(1) and it would be a mistake to try to formulate an ancillary rule of territorial scope, in the sense of a verbal formula such as s.196 of 1996 Act used to provide before its repeal, which must then itself be interpreted and applied. Nevertheless, the fact that the courts were dealing in principles and not rules did not mean that the decision as to whether s.94(1) applied was an exercise of discretion. It either applied to the relationship or it did not. In the case of peripatetic workers, for the purposes of s.94(1), the place of employment remained determinative, Todd v British Midland Airways Ltd (1978) ICR 959 applied. The question of whether, on any given facts, a case fell within the territorial scope of s.94(1) should be treated as a question of law. However, that was a question of degree on which the primary fact-finder was entitled to considerable respect. In V's case, the tribunal had been entitled to reach the conclusion that the centre of the employee's operations was in the UK and V's appeal was therefore dismissed. In the case of expatriate workers, the circumstances would have to be unusual for an employee who worked and was based abroad to come within the scope of the British labour legislation. However, there could be exceptional cases. The fact that an employee was British and had been recruited in Britain was insufficient to take the case out of the general rule but an employee who had been posted abroad by a British employer for the purposes of a business carried on in Britain might come within the scope of the British legislation. Another example was an expatriate employee of a British employer who was operating within what amounted for practical purposes to an extra-territorial British enclave in a foreign country. In the cases of L and B, they had equally strong connections with Great Britain and British employment law and their appeals were therefore allowed. Their cases were remitted to the tribunal for rehearing.

Judgment accordingly.

[2006] 1 All ER 823 : [2006] ICR 250 : [2006] IRLR 289

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