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As we reported in our case preview on 1 March 2011, at issue in Duncombe was whether successive fixed-term contracts for seconded teaching staff to European schools were objectively justifiable under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, which implement Council Directive 1999/70/EC concerning the framework agreement on fixed-term work.  The Supreme Court has now handed down its judgment.

Background

The appeal concerned the employment by the Secretary of State of two teachers, Mr Fletcher and Mr Duncombe, to work on secondment in European schools, which are focussed on providing a distinctly European education across the European Communities. Mr Fletcher was based in such a school in the UK while Mr Duncombe was based in Germany.  The Regulations for Members of the Seconded Staff of the European Schools 1996 (the “Staff Regulations“) limit the period for which teachers may be seconded to work in those schools to a total of nine years, comprising an initial probationary period of two years and a further period of three years, which is then renewable for a further four years (the “nine-year rule”).

Regulation 8 of the Fixed-Term Regulations provides that where an employee is employed under a fixed-term contract (which, when taken with a previous fixed-term contract, gives rise to continuous employment of four years or more), the employee shall be deemed to be employed under a permanent contract of indefinite duration unless the use of a successive fixed-term contract can be objectively justified.  The case concerned whether these arrangements can be objectively justified under the Fixed-Term Regulations.

Mr Fletcher and Mr Duncombe had each brought claims for a declaration that their contracts were permanent in accordance with Regulation 8.  In addition, Mr Duncombe (whose employment, unlike Mr Fletcher’s, had already terminated) also brought claims for unfair dismissal and wrongful dismissal.

The Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal each held that the use of successive fixed-term contracts was not objectively justified and consequently they were converted into contracts of indefinite duration. The Directive prevailed over the Staff Regulations and accordingly both teachers were entitled to declarations that their contracts of employment were indefinite.

Supreme Court

The Supreme Court unanimously allowed the Secretary of State’s appeal.

In doing so, it analysed the purpose of the Directive (as implemented by the Fixed-Term Regulations), which was to ensure “the application of the principle of non-discrimination, and to establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships”.

The Supreme Court held that employing the teachers on fixed-term contracts was objectively justified and accordingly these were not converted into permanent contracts under Regulation 8 of the Fixed-Term Regulations.  In particular:

  • the teachers’ complaint was against the nine-year rule itself; in other words, they were complaining about the fixed term nature of their employment rather than about the use of the successive fixed-term contracts that were used to make up the nine-year period. Had they been employed under one single nine-year fixed-term contract, they would have had no complaint, as the Regulations were aimed at preventing abuse of successive fixed-term contracts where in reality there was indefinite employment;
  • in relation to the purpose of preventing discrimination against workers on fixed-term contracts, it was not suggested that the terms and conditions under which Mr Fletcher and Mr Duncombe were employed were less favourable than those of comparable teachers on indefinite contracts;
  • it was not the nine-year rule itself that needed to be objectively justified, but the use of the last fixed-term contract bringing the total period up to nine years. The Supreme Court held that this can be readily justified by the existence of the nine-year rule, which prevented the Secretary of State from seconding the teachers to the schools for a longer period; and
  • there is no inconsistency between the Staff Regulations and the Directive. The Staff Regulations deal with the duration of the secondment, not with the duration of employment.

There were two subsidiary issues before the Supreme Court but, in light of the decision on the principal issue above, there was no need for those to be considered.  However, the Supreme Court did make the following observations:

  • it was inclined to agree with the Court of Appeal that Mr Duncombe and other teachers employed by the Secretary of State in European schools abroad are covered by the Fixed-Term Regulations (which do not specify any territorial scope). However, issues relating to the intended scope of the protection given by the Directive require a uniform approach across the EU and therefore, had the Supreme Court been required to consider it, a reference to the European Court of Justice would probably have been necessary;
  • as a wider issue, there were submissions regarding the potential impact of the EAT’s decision in Bleuse –v- MBT Transport Ltd [2008] ICR 488 (which states that where the principle of direct effect applies in relation to a right derived from European law, the territiorial scope of domestic law should be construed widely enough to give effect to that right).  There was no need to enter into that debate but the Supreme Court expressed doubts that such protection should depend on whether an employee was employed by an organ of the state (to whom the principle of direct effect applies) or a private employer; and
  • it was not necessary for the purposes of the current appeal for the Supreme Court to determine Mr Duncombe’s cross-appeal as to whether he was entitled to pursue an unfair dismissal claim in the Employment Tribunal, notwithstanding that he was based in Germany.  This is a particularly difficult area of law, which is governed by the House of Lords’ decision in Lawson v Serco [2006] ICR 250.  The Court reserved its decision in this issue for a later date.

Comments

This decision provides useful clarity (albeit within a fairly specific factual matrix) on the protection afforded to fixed-term employees under domestic and European law, with due reference to the objectives underpinning the legislation.

In a wider context, the Supreme Court also gave some indication as to how the law may develop in relation to the territorial scope of the Fixed-Term Regulations and the principles in Bleuse. Although the judicial comments on these issues are only obiter, they may provide some scope for lower courts to consider them in more detail and, if appropriate, refer any relevant issues to the European Court of Justice.

Further, it will be interesting to see whether the Supreme Court has an opportunity at a later date to consider in detail the principles in Lawson v Serco.