Scottish Court of Session Decisions

The respondent was employed by the appellants from about 1987 or 1988 until 25 November 1995 when his employment came to an end. On 8 February 1996, he made an application to an industrial tribunal claiming that he had been unfairly dismissed. In their notice of appearance, the employers contended that he had not been dismissed and also raised the question whether the tribunal had jurisdiction to deal with the application. A preliminary hearing under Rule 6 of the Industrial Tribunals (Constitution and Rules of Procedure)(Scotland) Regulations 1993 was held before a chairman sitting alone on 7 June 1996. By a decision dated 27 June 1996, the chairman held the Tribunal did have jurisdiction to deal with the case and rejected the preliminary objection. The appellants appealed to the Employment Appeal Tribunal but their appeal was rejected by a decision of the Employment Appeal Tribunal dated 5 December 1996. The Employment Appeal Tribunal granted leave to appeal.

At the hearing on 7 June 1996, the chairman heard evidence from the respondent and also from the appellants' recruitment manager for overseas and had before him a number of documentary productions, including various contracts and offers of employment. On that evidence, he made the following findings in fact.

Production R1, as it was placed before us, and presumably before the Tribunals, is not the actual contract but a form of contract. It is headed "Baku-Azerbaijan" and described as "Particulars of Employment" and as an "Overseas Contract". It provides:

There is thereafter provision for insertion of the date of commencement of employment and for the date of commencement of continuous service. Clause 1 is headed "Rate of pay and work cycle" and provides inter alia "1.2 Your normal work cycle will be six weeks on site and three weeks off site. Travel to and from Baku Kong is considered as part of the off site cycle".

Paragraph 3.1 is headed "Income Tax and National Insurance" and provides:

There was also produced a letter dated 30 June 1995 sent by the personnel officer of the appellants to the respondent. The letter is headed "Baku Contract" and states inter alia:

As the chairman noted in the passage above quoted, there was also produced an earlier contract in relation to the respondent's employment in Kazakhstan which was in all material terms identical to the Baku contract, except for the specification of the place of employment. Neither contract included any term which would have entitled the appellants to direct the respondent to work at any place other than the specified place of work.

The statutory provision which governed the question of the respondent's right to claim unfair dismissal at the relevant time was section 141(2) of the Employment Protection (Consolidation) Act 1978 which provided:

Section 141(2) was repealed by the Employment Rights Act 1996 and the provision now in force in section 196(1) of that Act, the terms of which are not materially different.

The chairman was referred to a number of authorities on the proper approach to section 141(2) including Wilson v. Maynard Shipbuilding Consultants A.B. [1978] 2 All E.R. 78 and Janata Bank v. Ahmed [1981] I.R.L.R. 417. In giving his decision he referred to the opinion of Donaldson L.J. in the Janata Bank case, where it was indicated that the question where someone ordinarily works is to be determined according to a broad brush approach and also to the opinion of the same judge in the Maynard Shipbuilding case and continued:

In giving their decision on the appeal, the Employment Appeal Tribunal, after narrating the submissions made to them, referred to the fact that the employers had not denied that the employee was continuously in their employment over the period from 1988 to the date of dismissal. They then continued:

Counsel for the appellants submitted that the question whether a person ordinarily works outside Great Britain involves an examination of the terms agreed at the inception of the contract in force at the time of the dismissal, and in particular of what parties had agreed as the working place. If a working place was identified and was outside Great Britain that was conclusive. It was only if the contract was not specific as to the place of work that factors like the so-called "base test" came to be looked at. In the present case, having regard to the contract and the letter, the place of work was clearly Baku. It was not submitted that the base test was wrong in an appropriate case but it was not the test to be applied in the present case. In support of these submissions counsel referred to the Wilson and Janata Bank cases and also to Todd v. British Midland Airways Limited [1978] I.C.R. 959 and to Carver v. Saudi Arabian Airlines 17 March 1999 unreported (Court of Appeal) and Steven v. Pan American Airways 19 November 1981 unreported (EAT) as well as Weston v. Vega Space Systems Engineering Limited [1989] I.R.L.R. 42. It was submitted that both the Industrial Tribunal and the Employment Appeal Tribunal had applied considerations which might be relevant where the contract contained no provisions as to the place of work or was one under which the employee worked on "postings" but that was not the case here and the base test and continuity of employment were both irrelevant.

Counsel for the respondent submitted that the respondent did have the right not to be unfairly dismissed. The Industrial Tribunal and Employment Appeal Tribunal had been correct in concluding that there had been one contract of employment throughout the employment and that, under that contract, he had ordinarily worked in Great Britain. The decision was one which gave effect to the legislative purposes of the Act. The Industrial Tribunal had found, after hearing evidence, that there was one contract under which the respondent worked for the appellants. Out of seven years employment, only 18 months had been spent abroad and only a short period in Baku, as had been established by the evidence, including that of the appellants' personnel manager. The question what the contract was was one of mixed fact and law and the Industrial Tribunal had decided that there was one contract under which the respondent was liable to be sent to various locations. It was a contract which varied from time to time in regard to the place of work, although it was accepted that it was not a contract providing for "postings". The Industrial Tribunal had been correct on the evidence which it had heard to look at the whole period with a broad brush approach. The respondent relied on a clear finding that Paisley was the hub of the appellants' business. The work cycle involved payment for periods off site as well as on. The salary was paid in sterling to a United Kingdom account and was liable to United Kingdom tax. The respondent's work was "directed" from Paisley. That was borne out by some of the terminology of the contract which provided that the employment was "regarded as an overseas posting" and referred to "assignment" to Baku. Similarly the offer letter spoke of "appointment" to Baku. The Industrial Tribunal had been entitled to take that into account as a relevant factor. The decision gave effect to the legislative purposes as those were explained in Todd supra.

It seems to us to be clear that the Industrial Tribunal took the view that the respondent worked for the appellants under a single contract of employment during the whole period from 1988 to 1995, and that the question as to where he ordinarily worked fell to be decided by having regard to what took place during that whole period. That is, we think, implied in the passage from the Industrial Tribunal decision setting out the facts of the case which we have already quoted and also from the sentence from the reasons given for the decision by the chairman which also we have quoted but which we repeat: the chairman said:

The first question seems to us to be whether the Tribunal was right in so approaching the case. At first sight, section 141(2) may appear to be intended to lay down a simple test, where the employee actually does his work. The Wilson and Janata Bank cases, however, recognised that there were circumstances in which such a simple approach did not give sufficient weight to the words "under his contract of employment" in the subsection: and that the simple approach could work capriciously and exclude from the protection of the legislation employees who might reasonably have been expected to be covered, within the apparent purposes of the legislation. One example discussed by Donaldson L.J. in Wilson is the case in which an employee normally works, or is required to work, in one place but, by reason of accidental circumstances, happens to be working in another place at the time of his dismissal. A second example is the case in which an employee's contract does not specify a place of work but requires him to work where the employer directs. The first of these problem cases may be solved by the application of the "contract test", that is that regard should be had to the contract as a whole in deciding where the employee ordinarily works: and the second may be solved by the "base test", that is by having regard to the centre from which the employee's work is, in terms of the contract, directed. The application of these tests can be further complicated by the need to have regard to what parties actually did during the period of the employment, in cases where there is no clear contract, or where the parties have evidently departed from the strict contract terms. However, Donaldson L.J. was careful to distinguish the cases in which these tests could properly be applied from a case in which the employee works from time to time in different places and each change is properly to be regarded as involving a variation of the terms of his contract governing his place of work. In the Janata Bank case Donaldson L.J. dealt with the case in which a contract is prematurely terminated and continued:

A case in which the employee works for the same employer in different places under a series of separate contracts is clearly a fortiori of the case of variations to a single contract there discussed by Donaldson L.J.

In the present case, it seems to us that the respondent faced two fundamental problems. The first was that the written contract under which he was employed at the time of the termination of his employment specified Baku and nowhere else as his place of work. There was no term in his contract which provided for transfer to any other location either with or without the agreement of the employee. Similarly, the previous contract under which he worked in Azerbaijan specified Azerbaijan and nowhere else as his place of work. We do not have the precise terms of any of the contracts relating to his previous periods of employment either as productions or in the findings, but there is nothing before us to indicate that the position under these contracts might have been any different. Prima facie therefore there appears to have been a series of agreed contracts with different places of work. The second fundamental problem was that if it were to be held that there was only one contract, it would be necessary to determine what the terms of the contract as to the place of work actually were. No convincing answer to this problem has been suggested. This is plainly not a case like Wilson in which the employee could be posted to carry out work at different locations, nor one like the airline cases in which the employee, although having a base at some centre, in fact worked in a variety of different places within a short period of time. It is true that there are features, such as the fact that the activities of the appellants world wide were directed from a base in Paisley, and that the respondent's communications in respect of his contract or contracts were with Paisley and also the fact that he was regarded as a United Kingdom resident and paid U.K. tax, which might suggest the existence of a single employment relationship. Those features are not, however, in our view, sufficient to infer a single contract of employment in the absence of some clear finding as to what the scope of the employment and the place or places at which it was to be carried out were to be. In our view both the Industrial Tribunal and the Employment Appeal Tribunal fell into error by failing to apply their minds to this essential question. Had they done so, it seems to us that the only reasonable conclusion, on the facts as we have them, is that either there was a series of separate contracts or that there was a series of variations of a contract; and that, in either case, the question as to where the employee ordinarily worked under his contract had to be answered by looking at the terms applicable during a particular period and at the place where he was actually performing his work. If the matter is approached in that way, it seems to us that the proper conclusion must be that the respondent ordinarily worked in Baku under the contract in force when his employment ended and, therefore, that he had no right to claim unfair dismissal.

We bear in mind that it has repeatedly been pointed out, for example in Clark v. Oxfordshire Health Authority [1998] IRLR 125 and Carmichael v. National Power plc [1998] I.R.L.R. 301, that the question of the existence and the terms of a contract of employment is one of mixed fact and law and that an appeal court should only differ from the finding of an Industrial Tribunal if it can be said that the Tribunal misdirected itself as to the law or, no doubt, if its decision was perverse. We have therefore considered whether the decision of the Industrial Tribunal may have been supported by the evidence which was heard: but we cannot see how, given the express contract terms, the result could be different from that at which we have arrived.

The authorities as to the proper approach to answering the question posed under section 141(2) and its successor, section 196(1) of the 1996 Act have recently been reviewed by the Court of Appeal in Carver v. Saudi Arabian Airlines supra with particular reference to the decision in Todd supra and what has been called the "function" test. These, however, are issues which were not debated in the argument before us, although we were referred to the decisions, and we do not think it necessary to add to the amount which has been written about them. It is sufficient to say that it seems to us that the determinating issue in the present case falls to be answered by the application of the contract test in the way that we have attempted to explain above.