Secretary Of State For Defence v Capel [1995] UKEAT 267_94_2306

EAT
Secretary Of State For Defence v Capel
[1995] UKEAT 267_94_2306 · 1995-06-23
MR JUSTICE MUMMERY (PRESIDENT): Section 141(2) of the Employment Protection (Consolidation) Act 1978 provides that part V of the Act, which deals with the jurisdiction of Industrial Tribunals to hear claims for unfair dismissal, does not apply to employment where, under his contract of employment, the employee ordinarily works outside Great Britain.This appeal from the majority decision of the Industrial Tribunal held at London (South) on 16 September 1993 is concerned with the correct interpretation and application of that section to the facts of the case found by the Tribunal.The background to the Tribunal's decision is that the Applicant, Mr Christopher Capel, presented an Originating Application on 27 January 1993 claiming constructive dismissal by the Secretary of State for Defence, from his employment as a Garrison Youth Worker from 2 July 1990 to 31 October 1992. He claimed reinstatement and compensation for unfair dismissal.The grounds of resistance by the Secretary of State are stated in the Notice of Appearance dated 2 March 1993. It was not in dispute that Mr Capel commenced employment as a civilian employee with the MOD on 2 July 1990. It was asserted he had been employed on a three-year fixed term appointment to work as a Garrison Youth Worker with the British Forces in Germany. He was posted to Germany for the duration of his employment.The point taken by the Secretary of State was that Mr Capel ordinarily worked outside Great Britain and was therefore excluded from the right to bring a claim for unfair dismissal in the Industrial Tribunal. For those reasons it was argued the Industrial Tribunal had no jurisdiction to hear the claim.That was the issue before the Industrial Tribunal which divided, as appears from the full reasons notified to the parties on 31 January 1994. The majority of the Tribunal, consisting of the two lay members, decided that the Tribunal had jurisdiction to hear the claim. The Chairman dissented.In those circumstances, the Secretary of State appealed by Notice of Appeal served on 9 March 1994. On the hearing of this appeal we have heard argument from Mr Duffy, on behalf of the Secretary of State, and from Ms Millar, on behalf of Mr Capel. To decide whose arguments are correct it is necessary to examine the reasons for the majority decision and the authorities relevant to the interpretation of Section 141(2).The facts found by the Tribunal were that Mr Capel was engaged in the United Kingdom specifically for a post as Garrison Social Worker among children of British Forces personnel serving in Germany.We have read the contractual documents that were before the Industrial Tribunal. The offer of appointment sets out the terms of the engagement of Mr Capel. It is dated 18 May 1990. The relevant parts provide as follows.
"1. .... Subject to you being medically fit for service abroad, (and your family being medically fit to accompany you), I am now able to formally offer you the post of Garrison Youth Worker Herford in the Federal Republic of Germany for a period of three years commencing 2 July 1990.
2. If you accept, your main conditions of service will be:- .... ."The relevant terms are first under "TENURE OF APPOINTMENT".
"4. Your offer of appointment is for employment in one particular country in the area abroad concerned and while you will not normally be moved from one area to another you may be moved to any establishment within the administration of that area."
Paragraph 11 states:
"11. In general, however, your appointment will be governed by regulations applicable to Ministry of Defence UK based non-industrial civilians serving abroad."
A later letter of 23 May 1990 acknowledges a letter from Mr Capel of 22 May 1990 accepting the offer of appointment. It refers to him accepting the
"offer of appointment as a UK based Youth Worker under the terms and conditions set out in our letter of 18 May 1990."
The contractual documents include another document dated 24 November 1989 headed as below and setting out in a preamble the background to the appointment:

" BRITISH FORCES GERMANY YOUTH SERVICE

GENERAL INFORMATION FOR INTENDING APPLICANTS

1. PREAMBLEThere are around 55,000 British Service personnel serving in British Forces Germany (BFG) - Army (British Army of the Rhine - BAOR) and Air Force (Royal Air Force, Germany - RAFG). They are stationed there as part of Britain's commitment to the North Atlantic Treaty Organisation (NATO) and in defence of the West. .... .
"These troops are accompanied by their families, and by a civilian support element, and together comprise a substantial British population, mainly in Northern Germany. .... ."
Reference is made to particular garrison towns and to the normal 2 to 3 year tours of service personnel at specified locations in Germany. Then they may be returned to the United Kingdom. It is pointed out that some units remain in the same location for many years, although personnel will rotate periodically.The majority members, having heard all the evidence and argument on the applicability of Section 141(2), came to the conclusion that Mr Capel was employed on a contract which had sufficient indications that the employment was in Great Britain and that the period he served in Germany was a "posting". For that reason the Industrial Tribunal had jurisdiction.The majority opinion set out all the indicators pointing to a base in Great Britain. They pointed to the salary paid on the Whitley Scale through the UK office at Bath, by transfer to a bank account in the UK and Germany; to the fact that salary was paid in sterling; to deductions at source for National Insurance and Income Tax; to the payment of London weighting as indicated on pay slips as well as in the contract; to teachers superannuation scheme deductions; to the provision of accommodation rent free (evidence was given that such employees often retain their residence in Great Britain); to the reclaiming of German VAT for purchases over a certain value; to the Joint National Council agreement for Salary levels negotiated in Great Britain; to the lack of access to the German system of worker councils for representation or negotiation, as well as to the fact that Mr Capel had been interviewed in Great Britain, instructed in Great Britain, attended training courses at colleges and could be required to work from time to time in Great Britain interviewing and attending conferences.The majority referred to the statement in the contract that it was for employment in one particular country, but pointed out that it went to state:
"will not normally be moved from one area to another"
. That implied to the majority that Mr Capel could in fact be moved at the direction of the Ministry of Defence in abnormal circumstances. They pointed to the circumstances of the letter of appointment and to various provisions in it. Their conclusion was that the totality of these indicators led them to conclude that Mr Capel "actually worked primarily in Germany" , but that did "not alter the fact that he did so under a contract for work in a number of countries and that his base was in the United Kingdom".The Chairman dissented from this conclusion. He referred to evidence given on behalf of the Secretary of State as to the meaning of "UK based". The evidence was to the effect that "UK based" was used in contra-distinction to "Home based"; that "UK based" was designed to distinguish such employees from those who were locally employed in the country concerned. He gave evidence that UK based staff never worked in the United Kingdom. The purpose of that expression was to indicate that, despite that fact, they enjoyed United Kingdom style terms and conditions of work.The Chairman went on to say that there were numerous statements in the contract that Mr Capel was recruited to work in the German area. There was no such job as he had available through the Ministry of Defence in the United Kingdom. Social work in the United Kingdom would be carried out by the local authorities. He then referred to the authorities, notably two cases cited to us by Mr Duffy, Wilson v Maynard Shipbuilding Consultants AB [1978] 1Q. B.665 and Janata Bank v Ahmed [1981] ICR 791. Applying those cases the Chairman concluded that:
"8 .... if, under his contract, the employee can only be required to work in Germany it must be a contract under which he ordinarily works in Germany [and therefore outside Great Britain]. Indicators of a headquarters elsewhere, to the location of which much of the administration of the contract is assigned, cannot alter that fact."
On the appeal Mr Duffy submitted that the Chairman's conclusion was correct, although he has not found it necessary to adopt all the reasons given by the Chairman as part of his argument on this appeal. Mr Duffy's argument on the appeal is extremely simple. He says that the correct legal test under Section 141(2) is that stated in the two Court of Appeal decisions cited to the Industrial Tribunal and are referred to in the Chairman's dissent. The nub of the matter is contained in the Judgment of the Court of Appeal given by Megaw L.J., in the case of Wilson v Maynard Shipbuilding Consultants AB (supra). The judgment deals with the problem posed by Section 141(2) at some length. For present purposes it is only necessary to refer to two paragraphs on page 675 F to H of the report in [1978] Q.B.

Lord Justice Megaw says:

"If the contract by its express or implied terms requires that the employee should do his contractual work wholly, or substantially wholly, in Great Britain, the answer will normally be simple. So, conversely, if under the contract the contractual work has to be carried out wholly or substantially wholly outside Great Britain. This will dispose, quite simply, of many cases."
He then dealt with a different case which arose on the facts of Wilson ; that is where there was an implied term of the contract which left it to the discretion of the employer whether work should be carried out by the employee wholly in Great Britain or wholly outside Great Britain. In those cases, it was necessary to go beyond the terms of the contract in order to look at the kind of indicators referred to in the majority decision in this case.Mr Duffy's submission on the basis of those extracts from the case in Wilson was that the contract concluded the matter.
"5. The Respondent [Mr Capel] was engaged by ..... letter of employment dated 18 May 1990 .... . The letter stated that the post offered was in the Federal Republic of Germany ... ."
The majority, he submitted, erred in considering the `indicators' of the base of employment, when the letter had made it clear that Mr Capel was not to work in Great Britain but was to work outside. Alternatively, he submitted there was no evidence for the Tribunal to support the conclusion that Mr Capel ordinarily worked within Great Britain.Ms Millar argued against that. She submitted there was no error of law in the majority decision. She drew a distinction between different classes of employees; those who are locally employed; those who are UK based Civil Servants posted from the United Kingdom; and those who are Home based. She made a particular point on paragraph 11 of the appointment letter which referred to the application of UK regulations to those persons posted abroad. She submitted those regulations applied equally to Home based and UK based personnel. Those regulations provided for access to the Industrial Tribunal.On the basis of that paragraph and other parts of the letter of appointment and correspondence relating to the appointment, she submitted that there was an ambiguity in this appointment. The ambiguity arose from the reference to "UK based" appointments and to regulations which gave access to Industrial Tribunals. If there is an ambiguity, she submitted, the Industrial Tribunal majority were legally correct in conducting the exercise of looking at all the indicators or factors to determine whether Mr Capel was ordinarily working under his contract outside Great Britain.We have also heard a brief submission from Mr Capel himself. He has protested against what he sees as the injustice of the situation; that if Mr Duffy is right there will be no Tribunal or Court with jurisdiction to hear his grievance. He made a general point that Mr Duffy's submissions meant that he could not use the law to assert his rights in relation to unfair dismissal from his employment, whereas, he said, the Secretary of State would have been in a position to assert the law against him in other situations.We have to decide the appeal on the legal arguments. The legal arguments concern a jurisdictional question. That is a matter of interpretation of Section 141(2) and its application to the material facts. In our view, the appeal must be allowed. The majority did err in law in going beyond (or behind) the contractual situation to factual matters relating to the various aspects of Mr Capel's employment. The law is clear as laid down by the Court of Appeal.If the contract provides where the person employed is to work, that determines, for the purposes of Section 141(2), where he ordinarily works. This contract provides for Mr Capel to work outside Great Britain. It must follow that Mr Capel ordinarily worked, for the purposes of Section 141(2) outside Great Britain. The Tribunal has no jurisdiction to entertain this claim. The appeal must be allowed.The consequence of allowing the appeal is that the application must be dismissed.