The Court of Appeal has held that overseas employees who have never worked in Great Britain are subject to the protection of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 and may bring an unfair dismissal claim in the UK (Duncombe and others v Secretary of state for Children Schools and Families).

The employees were teachers employed under a series of successive fixed-term contracts by the Department for Children, Schools and Families (a UK Government body) to work in European Schools. The European Schools are governed by specific legislation and rules limiting the duration of employment of school employees to a maximum of nine years. After nine years' employment on successive fixed-term contracts, the teachers' employment was terminated in accordance with those rules.

The teachers sought a declaration that they were permanent employees by virtue of the Fixed-term Regulations, which convert the contracts of employees who have been continuously employed for 4 years or more on successive fixed-term contracts into permanent employment contracts. They also brought separate claims of unfair and wrongful dismissal.

One of the teachers worked in Germany and had never worked in the UK. However, his employment contract with the UK Civil Service was subject to English law. Previous case law has held that, unless there are exceptional circumstances, employees who work overseas cannot bring unfair dismissal claims in the UK.

However, the Court of Appeal held that the Fixed-term Regulations apply to all fixed-term contracts governed by English law, whether or not the employee actually works in Great Britain. Therefore, by virtue of the Fixed-term Regulations, the employee was employed on a permanent contract. The Court also held that in order for such overseas employees to have an effective remedy under the Fixed-term Regulations, they must be permitted to pursue an unfair dismissal claim in relation to the expiry of the fixed-term contract. Therefore the territorial restrictions on bringing unfair dismissal cases should be modified to this extent.

Impact on employers

  • This decision is of relevance to any employer with employees overseas, particularly on contracts governed by English or Scots law, even if they are employed by a non-UK entity.
  • It is primarily relevant to employees on fixed-term contracts, but the principle in the case could be applied to benefit any overseas employee who wants to assert in the UK a right that ultimately derives from EU law. For example, it is conceivable that the same principle could be extended to give overseas employees the right to bring claims of automatic unfair dismissal under TUPE in UK employment tribunals, if they were employed on contracts governed by UK law.
  • Note that current UK discrimination statutes contain a separate test of territorial extent. However, this is not due to be maintained by the forthcoming Equality Bill and, if it is not, that could make it significantly easier for overseas employees on UK contracts to bring discrimination claims in the UK.