MR K P DUNCOMBE & OTHERS v THE DEPARTMENT FOR EDUCATION AND SKILLS [2008] UKEAT 0433_07_2404

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2008] UKEAT 0433_07_2404Case No Appeal No. UKEAT/0433/07Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR K P DUNCOMBE & OTHERSAPPELLANTTHE DEPARTMENT FOR EDUCATION AND SKILLSRESPONDENT
Before
His Honour Judge Peter Clark Mr K EdmondsonDate 24 April 2008
[1]APPEARANCES For the Appellants MR NIGEL GIFFIN (One of Her Majesty's Counsel) Instructed by: Messrs Reynolds Porter Chamberlain LLP Tower Bridge House St Katharine's Way London E1W 1AA For the Respondent MR B CARR (of Counsel) Instructed by: The Treasury Solicitor – Employment Team One Kemble Street London WC2B 4TS SUMMARY Jurisdictional Points – Working outside the jurisdiction Fixed Term Regulations Extra-territorial jurisdiction. Teachers working abroad. Breach of contract claim within ET jurisdiction. Whether Claimants can rely on provisions of FTER 2002, implementing F-T Working Directive (99/70/EC) in light of Elias P reasoning in Bleuse v MBT Transport (UKEAT/0339/07 21 December 2007). Consistency of EAT decisions. HIS HONOUR JUDGE PETER CLARK We have before us for full hearing appeals by Mr Duncombe and 6 others (including Mr Kelly, whose case raises a further and distinct issue to those raised in all 7 cases) (the Claimants) against the judgment of an Employment Tribunal sitting at London Central and chaired by Employment Judge Mr Solomans, promulgated with reasons on 18 June 2007. The Respondent is now The Secretary of State for Children, Schools and Families (formerly the DfES).[2]The procedural history of these appeals is set out in a judgment which I gave following a Rule 3(10) hearing in this matter held on 27 November 2007. That judgment was handed down on 12 December. Shortly thereafter Elias P handed down his judgment in Bleuse v MBT Transport Ltd (UKEAT/0339/07 21 December 2007). Based on the opinion expressed by the President in that case the Claimants seek permission to amend their Notice of Appeal to add a new point not argued below. Mr Carr, on behalf of the Respondent, does not object to that course although ultimately it is a matter for this EAT to decide whether we should entertain the new point. Background[3]The Claimants were each employed directly by the Respondent to work in European Schools ("ES") abroad under a succession of fixed-term ("F-T") contracts. The factual circumstances of their employment were not in dispute and are set out at paras 3-11 of the ET reasons. Each Claimant brought claims before the Employment Tribunal arising out of the expiry of the last of their respective F-T contracts. In the case of Mr Kelly he initially presented a claim of unfair dismissal prematurely, that is before expiry of his last F-T contract. He then withdrew that claim and presented a further claim. His first claim was dismissed by order of the Employment Tribunal on withdrawal. In so far as his second claim also raised a claim of unfair dismissal the Respondent took the point that such claim was barred under the doctrine of res judicata.[4]In addition to claims of unfair dismissal the Claimants also advanced claims of unlawful dismissal, breach of contract and for a declaration under Reg 9(5) of the Fixed Term Employment (Less Favourable Treatment) Regulations 2002 ("FTER"). All claims were dismissed by the Employment Tribunal at a PHR. The appeals in relation to unfair dismissal were rejected by HHJ McMullen QC on paper; I rejected the Claimants' application under Rule 3(10) as appears from my judgment dated 12 December. That leaves 3 issues arising for determination at this full hearing:(1) whether the Employment Tribunal erred in law in dismissing the claims of breach of contract (to include damages for unlawful dismissal).(2) whether the Claimants should be permitted to amend their Notice of Appeal to add the ' Bleuse point' and if so whether it assists the Claimants.(3) whether the Employment Tribunal was wrong to find that Mr Kelly was estopped from pursuing his complaint of unfair dismissal, albeit that, in common with the other Claimants, it had been dismissed on the basis that those claims do not fall within the Employment Tribunal's territorial jurisdiction. Breach of Contract[5]The way in which Mr Giffin QC puts this part of the claim is as follows. Each of the Claimant's F-T contracts of employment contained a clause similar to that at Cl 15 of Mr Duncombe's contract, namely:
"This contract shall be governed by English Law and the English courts shall have exclusive jurisdiction in all matters regarding it."
[6]FTER are part of the law of England. Reg 8(2) provides:
"(2) Where this regulation applies then, with effect from the date specified in paragraph (3), the provision of the contract mentioned in paragraph (10(a) that restricts the duration of the contract shall be of no effect, and the employee shall be a permanent employee, if— (a) the employee has been continuously employed under the contract mentioned in paragraph 1(a), or under that contract taken with a pervious fixed-term contract, for a period of four years or more, and (b) the employment of the employee under a fixed-term contract was not justified on objective grounds— (i) where the contract mentioned in paragraph (1)(a) has been renewed, at the time when it was last renewed; (ii) where that contract has not been renewed, at the time when it was entered into."
[7]Thus, runs Mr Giffin's argument, in bringing a claim of breach of contract for pay in lieu of notice these Claimants can bring the claim in the Employment Tribunal under the provisions of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 (employment having ended) and rely on Reg 8(2) to contend that, absent objective justification by the Respondent, the contract is 'permanent' and notice, or pay in lieu, ought to have been given by the Respondent but was not. The Respondent cannot contract out of its obligation under Reg 8(2).[8]This point was not raised in the earlier ES teachers case of Ashbourne v DFES (UEKAT/0123/07 26 November 2007). In that case a division on which I sat rejected the teachers' appeals in relation to FTER on the basis that the principles enunciated by Lord Hoffman in Lawson v Serco [2006] ICR 250 as regards expatriate employees applied equally to claims under FTER as to those of unfair dismissal under Employment Rights Act 1996 , applying the approach of Wilkie J in Williams v University of Nottingham [2007] IRLR 660 .[9]However, we are not persuaded that Mr Giffin has circumnavigated the Serco principles by characterising the claim here as one of breach of contract.[10]The remedy under FTER for breach of Reg 8 is a declaration under Reg 9(5), which provides:
"An employee who considers that, by virtue of reg 8, he is a permanent employee may present an application to an Employment Tribunal for a declaration to that effect."
[11]As the Employment Tribunal stated in the present case (reasons para 2), the claims for breach of contract and unlawful dismissal were solely based on the application of Reg 8. And as Mr Giffin acknowledges, without invoking Reg 8 the breach of contract claims are bound to fail. On their face the contracts are for a F-T, expiring by effluxion of time. There is no room to incorporate a notice term without the assistance of Reg 8.[12]In our judgment the domestic remedy for a breach of Reg 8 lies first with a declaration by the Employment Tribunal under Reg 9(5). Without such declaration the breach of contract claim must fail. In order to obtain that declaration it is necessary to bring a claim under Reg 9(5). And that claim falls outside the territorial reach of the Employment Tribunal because the Claimants worked solely abroad under their contracts: see Ashbourne.[13]Thus, in our judgment, the correct analysis of Mr Giffin's argument on this point is that whilst the Employment Tribunal plainly has jurisdiction to entertain the breach of contract claims those claims are entirely dependant on his obtaining the necessary declaration of permanence under Reg 9(5) and that he cannot do because such a claim falls outside the territorial reach of the Employment Tribunal (subject to the Bleuse point below). Accordingly the Employment Tribunal was right to dismiss these claims at the PHR on the basis that they have no reasonable prospect of success (Employment Tribunal Rule 18(7)(b)) and on the basis on which the point was then argued by Mr Giffin. The Bleuse amendment[14]Mr Giffin unashamedly accepts that in seeking to add a further ground of appeal he is advancing a wholly new argument. The point did not occur to him in advance of the President's judgment in Bleuse . It is a new point. Thus the Kumchyk principle is engaged. However, he points out correctly that the point goes to the Employment Tribunal's jurisdiction and requires no further findings of fact. It therefore falls within the narrow band of cases where a new point may be taken on appeal identified by Laws LJ in Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719 , §18. Further, Mr Carr does not oppose the amendment, since the point will arise in other overseas ES teacher cases. In these circumstances we shall permit the amendment. In doing so I have in mind two examples of the higher courts permitting a new point to be taken for the first time from personal experience. The first is ABP v Palmer [1995] ICR 406 , where the employer took for the first time in the House of Lords a point on the meaning and effect of s23(1) EPCA 1978, which argument proved conclusive in their Lordships' House; a point which owed much to the ingenuity of Mr Giffin then appearing with Mr Patrick Elias QC in succession to Mr Alan Wilkie following his appointment as Queen's Counsel; and remained so until the merits of the dispute were finally resolved in favour of the Claimants by the European Court of Human Rights some 10 years later. Secondly, in Aparu v Iceland Frozen Foods Plc (No.2) [2000] IRLR 196 , a point on the scope of remission back to the Employment Tribunal by the EAT was allowed to be taken by counsel who did not appear below for the first time in the Court of Appeal. Again it was determinative of the outcome in that case.[15]Turning to the merits of the point, in Bleuse the Claimant was a lorry driver working principally in Austria and Germany under a contract of employment with a company registered in England, which contract identified English Law as the proper law of the contract and sought to confer exclusive jurisdiction on the English Courts. Similar to clause 15 in Mr Duncombe's contract.[16]For our purposes the relevant finding in the EAT was that, subject to a limitation question, the Claimant could pursue a claim for holiday pay under the Working Time Regulations (WTR) 1998 which should be construed in a way compatible with the European Directive which the regulations were designed to implement (The Working Time Directive No 2003/88/EC). That may involve departing from the base test espoused by Lord Hoffman in Serco . We note that the Claimant was permitted to take this point for the first time on appeal by Elias P (para 58).[17]Mr Giffin submits that, assuming the Fixed – Term Working Directive (99/70/EC) is directly enforceable, no distinction can be drawn between the President's reasoning in Bleuse and the circumstances of the present case. Indeed, whereas Mr Bleuse was employed by a private employer, so that the question for the President was whether the WTR could be construed in a way consistent with the relevant Directive, in the present case the Respondent is an emanation of the state so that the Claimants' rights under the F-T Directive are directly enforceable against the Respondent. Mr Giffin has persuaded us that the right of an employee not to be discriminated against on the grounds that he is employed under a F-T contract is a right capable of direct enforcement.[18]We agree with Mr Giffin that no real distinction can be drawn between the present case and that of Bleuse . Thus the issue for us is that posed by Mr Carr. Was Bleuse correctly decided? He submits that it was not. That raises two distinct questions; first, on the argument which we have heard, what is our opinion on the point; secondly, what course ought we to take?[19]It is to be noted that the President heard no argument on behalf of the employer in Bleuse , the Respondents not appearing before him. Consequently it may be said that his decision was reached without the benefit of full argument which we have had. Nevertheless, his was a considered, reserved judgment and the President is not unfamiliar with this area of the law.[20]Turning to the argument before us, Mr Carr advances a telling submission. He points to the President's reference, at para 52 of the judgment in Bleuse , to the well-known Marleasing principle [(1990) ECR 1-6363] that the domestic courts must, if at all possible, construe the relevant domestic law so as to give effect to a relevant EU right.[21]Mr Carr does not dispute that principle. Thus, if the question here was whether FTER properly implemented the F-T Directive in a material respect that principle would come into play. But that is not the issue; the question is what is the territorial reach of the domestic law. That is simply not addressed in the F-T Directive. For domestic law to impose a territorial limitation does not run counter to the intention of the Directive. There is, contends Mr Carr, no obligation under the Directive for a member state, in implementing its provisions, to make special arrangements in order to include workers who are not employed in this country, a group who are generally excluded under the Serco rule.[22]That, it seems to us, is the difficulty with the President's approach in Bleuse . No authority, European or domestic, is cited for the proposition (para 57) that the territorial limitation explained in Serco must be modified so as to ensure that directly effective rights can be enforced by the English courts.[23]That brings us to the second question; given the clear opinion expressed by the President in Bleuse ought we to follow it or depart from it?[24]It is plain that one division of the EAT is not strictly bound by the earlier decision of a different division. We are bound only by decisions of the Court of Appeal and House of Lords. The early approach was typified in another extra-territorial jurisdiction case, Wilson v Maynard [1977] ICR 112 (EAT). There, the EAT followed the approach of an earlier division in Portec v Morgensen [1976] ICR 396, but with some reservations, leaving it to the Court of Appeal to correct the position, as proved to be the case [1978] ICR 376.[25]A shift in position may be detected during the presidency of Morison J. He took the view that where an earlier decision of the EAT was plainly wrong it should no longer be followed in order to remove uncertainty, see Tsangacos v Amalgamated Chemicals Ltd [1997] IRLR 4, and Secretary of State for Trade and Industry v Cook [1997] IRLR 150.[26]However, where a later division has reservations about an earlier EAT decision, it is permissible, in the interests of comity, to follow the earlier decision, leaving the Court of Appeal to correct any error in approach. That is the course which I took in the protected disclosure case of Babula v Waltham Forest College by reference to the judgment of Cox J in Kraus v Penna Plc [2004] IRLR 260 , itself departing from an earlier decision of the EAT in Darnton v University of Surrey [2003] IRLR 133 . I followed the most recent decision in Kraus and was later corrected by the Court of Appeal in Babula [2007] IRLR 346 .[27]Reverting to the present case we find ourselves in this position. Whilst respectfully expressing reservations as to the correctness of the President's approach in Bleuse we are not persuaded by Mr Carr that it is plainly wrong; the point is, in our view, truly novel. We see the logic of extending effectiveness beyond mere transposition of EU Law to the territorial reach of a Tribunal which is properly seized of the breach of contract claim in this case. Without modification to the Serco rule, applied on the facts of that case simply to the domestic law of unfair dismissal, these Claimants will be deprived of the anti-discrimination provisions of the F-T Directive if the Employment Tribunal is not permitted to apply Reg 8(2) FTER. In these circumstances we are not prepared to depart from that approach, thereby opening up the spectre of conflicting authority within the EAT. That said, we would welcome an application by the Respondent for permission to appeal on this point; something which could not happen in Bleuse itself due to the failure of the employer to take part in those appeal proceedings.[28]It follows that we shall allow the Claimants' appeals on this point and declare that the Employment Tribunal has jurisdiction, in hearing the claims of breach of contract, to apply the relevant provisions of FTER to determine the question as to whether the Respondent can justify employment of the Claimants under fixed-term contracts. We note that the Respondent was held by an Employment Tribunal not to have made out the defence of justification in the case of Mr Fletcher, an ES Teacher employed at the ES in Culham (London Central Employment Tribunal Case No. 2700492/2007 13 December 2007), a case in which Mr Giffin and Mr Carr appeared as they do before us. That decision, we understand, is under appeal. Mr Kelly[29]The Employment Tribunal found (reasons paras 23-32) that Mr Kelly was estopped from pursuing a claim of unfair dismissal because it was raised in his first ET1, which claim was withdrawn and dismissed by the Employment Tribunal under Employment Tribunal Rule 25(4). In reaching that conclusion the Employment Tribunal considered the approach of the Court of Appeal to Rule 25(4) in Khan v Haywood and Middleton PCT [2006] IRLR 793 .[30]The sole point taken by Mr Giffin on this aspect of the case is that the unfair dismissal claim brought by Mr Kelly in his first ET1 was one which the Employment Tribunal had no jurisdiction to entertain. The claim was lodged prematurely because at that time the Claimant was not under notice of termination nor had his F-T contract of employment expired by effluxion of time. On this basis he seeks to distinguish the effect of Dr Khan's case.[31]Reliance is placed by Mr Giffin before us, as he did below, on my observation in Air Canada v Basra [2001] IRLR 683, para 30, that a decision by a Tribunal that it does not have jurisdiction to entertain a claim will not support a plea of res judicata on the merits of the claim if it is then brought in the appropriate forum.[32]That argument was rejected by the Employment Tribunal (reasons para 31), in our judgment rightly. In the Air Canada case the Tribunal refused permission to amend the claim form to add complaints of victimisation. Those claims were then raised in a fresh claim form.[33]In the present case the claim of Mr Kelly was dismissed on withdrawal. We can see no distinction between the present case and that of Khan . Rule 25(4) applies. The discrete point raised in Mr Kelly's case is therefore rejected and his appeal is dismissed. Disposal[34](1) The unfair dismissal appeal of Mr Kelly in the EAT is dismissed.(2) The breach of contract appeals of all the Claimants are allowed and those cases are remitted to a fresh Employment Tribunal for hearing of the breach of contract claims, applying Reg 8 FTER.