United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M FODDER (of Counsel) Instructed By: Messrs Clyde & Co Solicitors 51 Eastcheap London EC3M 1JP
For the Respondents	MISS A PROOPS (of Counsel) Instructed By: Messrs Beachcroft Wansbroughs Solicitors 100 Fetter Lane London EC4A 1BN


 


HIS HONOUR JUDGE PETER CLARK:

1. This appeal is concerned with the limits of the jurisdiction of an Employment Tribunal in England to entertain complaints of unfair dismissal and unlawful deductions from wages brought under the provisions of the Employment Rights Act 1996 (ERA) by the Applicant, Ms Jackson by an Originating Application presented to the London (Central) Employment Tribunal on 10 September 2001. She there named as Respondents to her complaints (1) Ghost Ltd and (2) Ghost Inc, the former being an English Company, the latter an American corporation.
2. The position is complicated by two factors; first, the repeal of section 196 ERA by section 32(3) of the Employment Relations Act 1999, with effect from 25 October 1999; secondly, the apparently conflicting decisions in this appeal tribunal to be found in Bryant v The Foreign & Commonwealth Office (EAT/174/02/RN. Judgment delivered ex tempore by Burton P on 10 March 2003) and Lawson v Serco Ltd (EAT/0018/02/TM) a case heard on 12 December 2002 by Judge Altman and members, in which the reserved judgment was handed down on 11 March 2003. It appears that neither division was aware of the other's involvement on the topic. We understand that the Serco case is to be considered by the Court of Appeal; permission to appeal was refused in Bryant following an oral hearing before Pill LJ on 11 June 2003 [2003] EWCA Civ 851.
3. In addition, a similar question is raised in a case before His Honour Judge Burke QC and members, The Financial Times Limited v Bishop (EAT/147/03). Mr Fodder, who appears on behalf of Ms Jackson in this case, also appeared for Mr Bishop before Judge Burke's division; Mr Swift, appearing for The Financial Times is in Chambers with Ms Proops, who represents Ghost before us. In these circumstances, bearing in mind the possible hiatus caused by the Bryant and Serco decisions, it has been agreed that the skeleton arguments lodged in Bishop should be placed before this division and vice-versa in the hope that all lines of argument are fully developed in both appeals.
4. Although not bound by the earlier EAT decisions there is a convention that, in the interests of comity, later divisions should follow the decisions of previous divisions of the EAT. However, where relevant points have not been argued in previous cases as, we shall seek to demonstrate happened both in Bryant and Serco, we may depart from an earlier decision in order to arrive at what we conclude is the applicable law.
5. That said, it is not our intention to presume to lay down definitive guidance as to the approach to be taken by Employment Tribunals on this question for the future; that may properly be left to the Court of Appeal. Rather, our principal task is to determine this appeal on its own facts. That, however, necessarily involves close consideration of the applicable principles.

Procedural matters

6. Before embarking on the facts of this case and the applicable law we should record certain interlocutory rulings made in these appeal proceedings.
7. This matter came before an Employment Tribunal chaired by Mr T.P. Ryan on 7 and 21 November 2001 for determination of two preliminary issues; (1) whether the Applicant was employed by the first or second Respondent and (2) whether the Tribunal had jurisdiction to entertain her complaints which, in addition to the two ERA claims mentioned earlier also included a complaint of breach of contract brought under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. Following deliberations in private held on 25 March 2002 the Tribunal promulgated its reserved unanimous decision on 10 April 2002. By that decision the Tribunal answered those preliminary questions as follows; the Applicant was employed, not by the English Company, Ghost Ltd, but by the American corporation, Ghost Inc. It followed that her claims lay, if at all, against Ghost Inc and not Ghost Ltd. There is no appeal against that finding; consequently Ghost Ltd does not feature in this appeal. Secondly, the Tribunal found that it had no jurisdiction to entertain any of Ms Jackson's complaints. She brings this appeal against that finding only insofar as it relates to her ERA complaints; not that of breach of contract. We emphasise that limitation in the light of the view taken by Burton P's division in Bryant as to Mrs Bryant's breach of contract claim. It follows that we express no view in the present case as to the extent of the Tribunal's jurisdiction to consider breach of contract claims.
8. The original Notice of Appeal, settled by the Applicant's solicitor, is dated 22 May 2002. The grounds of appeal were later amended on 21 October 2002, following a preliminary hearing held before a division presided over by Judge Burke QC on 16 September 2002. On that occasion Ms Jackson was represented by Mr David Reade of Counsel. The form of amendment was suggested by the Tribunal. The amendment goes to the question as to whether the Tribunal made a finding as to whether Ghost Inc resided or carried on business in England and Wales within the meaning of regulation 11(5)(a) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001 (the 2001 Regulations). (The regulation 11(5) finding).
9. Unusually, the hearing of this appeal has been spread over three days, 6 March, 2 May and 20 June 2003. The explanation is that on the first day we were aware that the Serco decision was about to be handed down (although not of the Bryant case), but were unable to provide copies of the draft judgment to these parties on that occasion. Further developments resulted, not only in two further days of hearing, but additional composite written submissions thereafter and finally submissions to deal with the judgment of Pill LJ on the permission to appeal (PTA) application in Bryant.
10. During the course of our hearings:

(1) Mr Fodder applied to further amend the Notice of Appeal to add a further ground of appeal, that the Tribunal had failed to give adequate ("Meek compliant") reasons for their decision on jurisdiction. That application was opposed by Ms Proops.

(2) Ms Proops sought permission to raise, for the first time, a cross-appeal, contending that if, contrary to their primary case, the Tribunal made a finding that Ghost Inc resided or carried on business in England for the purposes of regulation 11(5)(a) they were wrong in law to do so. That application was not opposed by Mr Fodder.

11. On the second day of hearing, 2 May, we allowed both amendments. It seemed to us that we should have all matters before us for consideration.
12. We then heard argument on the cross-appeal and dismissed it for reasons which can more conveniently be set out later in this judgment.
13. Finally, Mr Fodder took what may be called a "Kumchyk" point. He contended that Ms Proops had not argued below, as an alternative ground for submitting that the Tribunal had no jurisdiction to consider the Applicant's ERA complaints, that her employment had no substantial connection with England and Wales. We accepted, by reference to Ms Proops' written submissions below, that the point was sufficiently identified below to permit the argument to proceed before us on appeal.

The Facts

14. The Tribunal found the following primary facts.

Tanya Sarne is the prime mover behind two trading vehicles, Ghost Ltd a company incorporated in the UK in 1984 and Ghost Inc a company incorporated in California in 1998. Ms Sarne is a director of both companies, as is Mr Fatah. They hold the majority shareholdings in both companies. Ghost Ltd has a third director, Allison Harper, as does Ghost Inc, a Mr Walters. Ms Sarne and Mr Fatah live in England.

15. The business of both companies is the manufacture and sale of designer clothing. Ghost Ltd employs staff in the UK; it sells some of its stock to Ghost Inc for resale through its American outlets. The first Ghost Inc store was opened in Los Angeles in June 1998. The two companies are separate legal entities. The accounts of Ghost Ltd are prepared in the UK and show financial transactions between the two companies. Ghost Inc's accounts are prepared by separate auditors in the USA in accordance with the accounting requirements in the relevant States and also show transactions with Ghost Ltd.
16. The Applicant, Ms Jackson had considerable experience of working in the fashion industry in the UK, in Europe and in the US. By early 2000 she had lived and worked in the USA for a number of years.
17. In early February 2000 Ms Sarne telephoned the Applicant at her home in New York and said that she was looking for a manager for her New York store. The Applicant was then expecting her first child and said that she was not looking to move jobs, however she agreed to meet. That meeting took place between Ms Sarne, Mr Fatah and the Applicant. Ms Jackson was then manager of the Barbara Bui store in New York. On that occasion the Applicant confirmed that she did not wish to change jobs. However, further contact took place, by telephone, e-mail and personal contact, culminating in a meeting held on 9 April 2000 at an hotel in New York. Following that meeting the Applicant agreed to work for Ghost in their new store in New York.
18. There was a factual dispute between the parties as to whether discussions took place on the basis that the Applicant was to be employed from London by Ghost Ltd, as she contended, or whether the existence of Ghost Inc was explained by Ms Sarne, making it clear that the American company would be the Applicant's employer. The Tribunal preferred the Respondent's version to that of the Applicant.
19. In April 2000 the Applicant went to work at the New York store. It was housed in premises leased by Ghost Inc. A Ghost Inc bank account was used there. The payroll was made out in the name of Ghost Inc. Transactions with customers were in the name of Ghost Inc. Members of Ghost Ltd's staff in England were from time to time seconded to work in the New York store, but their time was charged by Ghost Ltd to Ghost Inc.
20. The Applicant was paid by Ghost Inc. She said that she was an employee of Ghost Inc when applying for maternity benefits from the relevant New York Benefits Bureau during maternity leave. She accepted that all other members of staff in the New York store, of which she was the manager, were employed by Ghost Inc. Throughout her employment, which ended on 11 June 2001, the Applicant, when working, worked in the New York store and not elsewhere.

The Tribunal Decision

21. The Tribunal found on these facts that the Applicant's employer was Ghost Inc and not Ghost Ltd. As we have said, that finding is not challenged on appeal. What it amounts to is that the Applicant, who lived and worked in New York, was recruited in America to work for an American Corporation as manager of its New York store and did so throughout her employment. There is no suggestion that she worked in England for the English company, Ghost Ltd.
22. Having so decided the second question for the Tribunal was whether it had jurisdiction to entertain her ERA claims. As indicated earlier, we are not concerned in this appeal with her breach of contract claim. In concluding that they did not the Tribunal's reasons range over a number of topics discussed in argument. They include; the repeal of section 196 ERA; the effect of section 244(1) ERA; the opinions of the learned Editors of Harvey; the Brussels and Lugano Conventions; the effect of regulation 11(5) of the 2001 Regulations and its application to the facts of this case; the principles of statutory construction to be found in Bennion, the position of mariners and offshore workers and the proper law of the contract.
23. We hope that we shall be forgiven for not examining the Tribunal's reasoning in closer detail. The question for us on appeal is whether their conclusion should stand. Having received fuller argument than was advanced in either Bryant or Serco we have no doubt that, on the facts as found, it should. What follows are our reasons for dismissing this appeal and the Respondent's cross-appeal.

The Cross-appeal

24. It was a principal plank of the Applicant's case below and before us (and the basis of decision by the EAT in Serco) that the answer to the jurisdiction question lay in regulation 11(5) of the 2001 Regulations.
25. The 2001 Regulations were made under section 7 of the Employment Tribunals Act 1996 (ETA). They replaced the earlier 1993 Regulations. Regulation 11, headed "Proceedings of Tribunals" provides, by regulation 11(5), so far as is material:

"The Rules contained in Schedules 1, 2 and 3 shall apply in proceedings to which they relate where –

(a) the respondent or one of the respondents resides or carries on business in England and Wales; "

26. Before considering the relevance of regulation 11(5) in the appeal we should first give our reasons for dismissing the cross-appeal, which raises two questions; (1) did the Tribunal find that Ghost Inc did reside or carry on business in England and Wales? (2) if not, ought it to have done so or not; if so, ought it to have done so or not? Plainly, if Ghost Inc did not reside or carry on business in England and Wales then the appeal, which is principally based on the application and effect of regulation 11(5), fails. If it did, then regulation 11(5) is in play and, in the light of the EAT decision in Serco, which Mr Fodder invites us to follow and apply in this case, very much in play.
27. As to the first question, the Tribunal deal with the issue raised in argument at paragraph 8.7-8 of their Extended Reasons, where they say:

"8.7 Relying upon that regulation Counsel for the Applicant [not Mr Fodder] said that Ghost Inc resided or carried on business in England and Wales because Ms Sarne and Mr Fatah, the controlling minds of the company, resided and did most of the direction of the company business from England where they lived. Counsel for the Respondent argued that the residence of Ms Sarne and Mr Fatah was irrelevant and that Ghost Inc did not reside or carry on business in England or Wales and therefore there was no jurisdiction.

8.8 The Tribunal was not persuaded by that argument on the part of the Respondents. We were troubled by a wholly different consideration. ... ."

They then go on to deal with the relevance of regulation 11(5) to the jurisdiction question which we address separately below.

28. We read the Tribunal's reasons to be there saying that they reject the Respondent's submission that Ghost Inc did not reside or carry on business in England and Wales, preferring the submission advanced on behalf of the Applicant. We therefore reject Ms Proops' first submission in the cross-appeal, that the Tribunal did not find that Ghost Inc resided or carried on business in England and Wales.
29. Thus the second and critical question is whether the Tribunal was entitled to so find on the facts of this case.
30. It is common ground between Counsel that a company resides in England and Wales if it is incorporated here (not the case of Ghost Inc) or has its central management and control exercised here. Dicey and Morris. Conflict of laws. 13^th Edition. Rule 152(2). Paragraph 30-005.
31. Ms Proops advances a number of factors which she submits point away from a finding that the central management and control of Ghost Inc was exercised in the UK. We reject that submission. The fact that two of the three directors of Ghost Inc at least (there is no finding by the Tribunal as to Mr Walters) and major shareholders, Ms Sarne and Mr Fatah, live in England and are the controlling figures behind Ghost Inc was sufficient material on which the Tribunal could properly base their finding that Ghost Inc was resident in England and Wales for the purposes of regulation 11(5). That is enough to bring this case within the purview of regulation 11(5).

The Repeal of Section 196 ERA

32. It is convenient now to deal with the reason for this appeal; the repeal of section 196 ERA.

Before its repeal section 196(2) provided:

"The provisions to which this subsection applies do not apply to employment where under the employee's contract of employment he ordinarily works outside Great Britain."

33. Those provisions include, so far as is material in this case, the right under Part II not to suffer an unauthorised deduction from wages and the right under Part X not to be unfairly dismissed.
34. It is fair to say that section 196(2) and its predecessors gave rise to difficulties of interpretation. Was the "base test" or the "contract test" to be applied (Wilson v Maynard [1978] ICR 376 (CA) decided it was the latter). The provision was last considered by the Court of Appeal in Carver v Saudi Arabian Airways [1999] IRLR 370. The facts of that case are not without interest when we come to consider the discussion before us as to why section 196 ERA was repealed. Mrs Carver commenced employment with the Respondent airline in April 1986 as a flight attendant. She trained in Jeddah and then transferred to India. After about four years she moved to London which remained her base until she resigned from the employment in 1996. During that time all her tours of duty began and ended at Heathrow Airport. Following her resignation she presented complaints of unfair constructive dismissal and sex discrimination to the Employment Tribunal. The Tribunal held that it had no jurisdiction to entertain either complaint. The EAT upheld that decision. However, on further appeal the Court of Appeal drew a distinction between the Tribunal's jurisdiction to entertain the complaint of unfair dismissal and that of sex discrimination.
35. As to the unfair dismissal complaint it was held that under the applicable contract test the Tribunal was required to consider the position as it appeared at the date of the contract (1986). Looked at in that way her base was Jeddah and the Tribunal was right to decline jurisdiction in the ERA complaint.
36. However, the position under the Sex Discrimination Act 1975 (SDA) differed. In the case of the ERA the question was where, under the contract, the employee ordinarily worked. Under the SDA the question was whether, at the time of the act of discrimination alleged, the employee worked wholly or mainly outside Great Britain (section 10(1) SDA, as then drafted). The case was remitted for re-hearing on this point.
37. Why, then was section 196 repealed?
38. We have been referred to the Parliamentary debate reported in Hansard on the Employment Relations Bill leading up to the passing of the 1999 Act which, among other things, repealed section 196 ERA. Mr Fodder objected to our considering the debate in Parliament as an aid to construction. We bear in mind the guidance to be found in the speech of Lord Browne-Wilkinson in Pepper v Hart [1993] AC 593, 634 D-E:

"... reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity. ... references in court to Parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words ... ."

Applying that guidance we concluded that it was right to consider the Parliamentary material.

39. We have received submissions on both sides on the material before us, limited as Lord Browne-Wilkinson went on to direct, to the statement of the Minister, here Mr Ian McCartney MP. He stated that section 196 ERA generally limits the operation of the Act to employees who ordinarily work in Great Britain. After careful consideration the Government concluded that the complexities are unnecessary. International law and the principles of our domestic law are enough to ensure that our legislation does not apply in inappropriate circumstances. There must be some proper connection with the UK first and in such cases it is right that UK law should apply. He believed that it was now time to simplify the provisions in line with the Government's commitment to good regulations. He went on to list a number of "other significant advantages" in repealing section 196. One was to ensure that the Government fulfilled their European Union obligations (a reference, it is common ground, to the Posted Workers Directive (PWD) to which we shall return. He singled out the case of Mrs Carver in stating that those who had worked for some years in the UK would not be able to rely on the ERA protection; similarly those employees temporarily working in Great Britain, by reference to PWD.
40. Whilst all these aims are understandable the Minister's statement begs as many questions as it answers. First, having "simplified" matters by repealing section 196, in the absence of an amended provision who precisely is entitled to enjoy the protection of the ERA and who is not? Secondly, what has the PWD got to do with ERA Rights?
41. Dealing with the second question first, Mr Fodder submits that the PWD has nothing to do with ERA. That was not the view expressed by Burton P and later Pill LJ in Bryant. It is convenient at this point to consider precisely what was and was not argued and decided, both in Bryant and in Serco.

Bryant

42. Mrs Bryant was employed by the Foreign and Commonwealth Office at the British Embassy in Rome from 4 January 1994 until 15 June 2001. An Employment Tribunal found as fact that it was a locally-engaged post; recruiting for the post and the making of the employment agreement took place within Italy. The post, although requiring security vetting, did not have to be filled by a British citizen. The post did not involve reporting back to or taking instructions from the Respondent's offices in the UK. The duties were carried out by Mrs Bryant entirely in Italy. She was paid at local rates.
43. On these facts the Tribunal found that they had no jurisdiction to entertain her complaint (among others) brought under ERA. Before the Tribunal Mrs Bryant was represented by Counsel, Mr Raymond. Counsel then argued (see EAT judgment. Transcript. Paragraph 7) that the statutory jurisdiction of the Employment Tribunal in relation to unfair dismissal should be regarded as unconditionally extra-territorial (since the repeal of section 196 ERA) and is available to anyone in the world. That proposition, apparently rejected by the Tribunal in Bryant, as it was by Mr Ryan's Tribunal in the present case (Reasons. Paragraph 8.5), finds support in the opinion to that effect given by the learned Editors of Harvey, volume 1. C1, paragraph 1111. That opinion is proffered in the absence of any supporting authority, although, in fairness, at paragraph 1113-1123, the Editors add:

"In theory, therefore, a US citizen could bring a claim for unfair dismissal in the United Kingdom against his or her US employer, relating to employment in the US, in circumstances in which the case has no connection whatsoever with the UK. This cannot have been the intention of Parliament when section 196 of the ERA was repealed."

As we shall seek to demonstrate, not only was that not the intention of Parliament, more importantly it was not the effect of the repeal of section 196.

44. When Mrs Bryant's appeal came on for hearing before the President's division in the EAT she appeared in person. The Respondent, as below, was represented by Mr Jason Coppel of Counsel. As appears, again from paragraph 7 of the President's judgment, Mrs Bryant did not pursue the line taken by Mr Raymond on her behalf before the Tribunal. She did not argue for unconditional extra-territoriality. Instead the case which she advanced, based on a decision of the Italian Supreme Court, Bulli Dario, 15 October 1987, was that it was highly unlikely that as an employee of a diplomatic mission abroad she could bring her claims in Italy. Thus she argued, not for a general extra-territorial jurisdiction in the Tribunal following the repeal of section 196, rather a limited exception in her case, that of an employee of a diplomatic mission abroad, precluded from suing in the foreign country.
45. It does not require much thought to conclude that such a proposition, baldly stated, has no basis in law. Particularly so, on the facts of Bryant, where the EAT noted (paragraph 19) that by a letter to Mrs Bryant dated 16 October 2001 from the Treasury Solicitor, acting for the Respondent, the Respondent waived diplomatic immunity in respect of any proceedings she might take in Italy.
46. It follows, in our view, that the EAT was plainly right in rejecting the case advanced by Mrs Bryant on appeal. That was an end of the matter, as Pill LJ later endorsed on the PTA application.
47. However, it seems that Mr Coppel had, understandably, anticipated, for the purpose of his skeleton argument, that the unconditional extra-territoriality point would again be run on behalf of the Applicant on appeal, not that she would, now appearing in person, abandon it. So the President took the opportunity to consider that point in the light of the Tribunal's decision and reasoning and Mr Coppel's submissions for the Respondent, in the absence of any argument to the contrary.
48. Pausing there, it must follow, as Mr Fodder submits in the present appeal, that the President's observations on the general question of jurisdiction post – section 196 are both obiter, that is, not necessary for the EAT's decision in Bryant and per incuriam, that is, reached without full argument, particularly on the employee's side.
49. It is nevertheless useful to examine the argument advanced on behalf of the Respondent in Bryant and accepted by the EAT.
50. First, what was not argued and we make no criticism of Mr Coppel in this respect; he could hardly be expected to anticipate arguments which not only were not put forward by or on behalf of Mrs Bryant, but were necessarily abandoned by her, in the light of the way in which she in fact put her case on appeal. The EAT was not referred to regulation 11(5) 2001 Regulations, on which as we shall see, the EAT in Serco rested its decision and which is at the forefront of Ms Jackson's appeal in the present case; nor was any argument addressed, or at any rate acknowledged and considered in the President's judgment, on the effect of section 244(1) ERA, which forms the primary case advanced by Ms Proops in this case and, we see on paper at last, that advanced by Mr Swift on behalf of the employer in Bishop.
51. In rejecting the unconditional extra-territoriality contention the President advanced three reasons (paragraph 25):

(1) The PWD point, linked with the unfairness of the position in which Mrs Carver found herself. Those points emerged from the Minister's statement to the House recorded in Hansard, although it is not clear to us whether the Hansard extracts were placed before the President in Bryant.

(2) The special treatment of merchant seamen (ERA section 199) and offshore workers (section 201).

(3) The presumption that English statutes do not ordinarily have extra-territorial effect.

52. On the PTA application, Mrs Bryant again appeared in person and repeated her argument advanced before the EAT. In rejecting that application Pill LJ, at paragraph 6, adopted the PWD reason for the repeal of section 196 mentioned by the President and at paragraph 7 said this:

"There is nevertheless, in my judgment, a correct finding by the Employment Appeal Tribunal which it is not arguable would be reversed in this court – that under ordinary jurisdictional rules, even with that provision [section 196] deleted from the Act, there is no jurisdiction in the Employment Tribunal to consider the application."

53. In considering that observation we bear in mind that this was a PTA application and its outcome does not strictly bind us. However, we think that it is a useful starting point for our analysis which follows.

Serco

54. We have been shown the Decision and Extended Reasons of the Watford Employment Tribunal in that case. Serco, a Company registered in England and Wales, whose registered office was in Sunbury-on-Thames, offered employment to the Applicant with effect from 20 September 2000 as a Security Supervisor working on Ascension Island within the Security Section of Serco in its support of the RAF and civilian Police on the Island. On 6 April 2001 he resigned in circumstances which he alleged amounted to constructive dismissal, for a reason which was automatically unfair, that is asserting a statutory right, such that no qualifying period of employment arose under section 108(1) ERA. The statutory rights which he alleged he had asserted and which assertion, he maintained formed the reason or principal reason for dismissal related (a) to the protection afforded by the Working Time Regulations 1998 and (b) Health and Safety issues (ERA section 100(1)(c).
55. A preliminary hearing took place on the issue of the Tribunal's jurisdiction under ERA. The Tribunal, having heard argument from the Applicant in person and Mr Suter, an Employment Consultant for the Respondent, felt that without access to a full library of statutes and text books on Conflicts of Laws they were handicapped in reaching a conclusion on the point. They nevertheless expressed their gratitude to Mr Suter for his submissions; we infer that Mr Lawson, understandably, was less than adequately equipped to deal with the arcane points of law thrown up in his case.
56. As appears from their reasons they considered what may be described as certain Conflict of Laws issues; Harvey; regulation 11(5) of the 2001 Regulations; section 244(1) ERA; section 204 ERA and Carver. Their conclusion, in a case of what they describe as a UK Company engaging a UK National specifically to work in Ascension Island, was that they had no jurisdiction to consider the Applicant's claim of unfair dismissal.
57. Again, we are not concerned with their findings on his breach of contract claim. Their parting remark (paragraph 18 of their reasons) bears repetition here:

"If, as is perfectly possible, our legal analysis in this case is incorrect and we do have jurisdiction to deal with Mr Lawson's contract, then it follows that we would have jurisdiction to deal with complaints of all of his colleagues and other people in other parts of the world where unfair dismissal legislation was non-existent or less sophisticated than our own. The practical consequences could be horrific."

Particularly, we might add, for the Employment Tribunals Service which we note, for the last year ending April 2003, has seen the number of complaints presented to Employment Tribunals fall but only to a figure just below 100,000.

58. Before the EAT the boot was, with respect to Mr Suter, to some extent on the other foot. Mr Lawson was now represented by very experienced Counsel in the field, Mr Jacques Algazy, appearing with Mr Spencer. Mr Suter again represented the Respondent, Serco. Judge Altman's division was referred to the Minister's statement in Hansard, the opening passage from which is cited (transcript 1F). However, no reference is made in the judgment to the PWD, a point which found favour with Burton P and Pill LJ in Bryant.
59. At paragraph 11 the learned Judge concluded that section 244, relied on by Mr Suter, did not determine the question of jurisdiction in the Respondent's favour; rather, that the repeal of section 196 removed any qualification of jurisdiction from the body of the Act itself so as to leave any such limits to other legal provision.
60. Going to the heart of the judgment, the EAT concluded in Serco (paragraph 18) that the only limitation on the right to bring a claim under the ERA was that imposed by regulation 11(5) of the 2001 Regulations, namely that the employer carries on business (or, we would add, resides) in England and Wales. In passing, Judge Altman there observed that there were similar provisions for Scotland, a point to which we shall return.
61. On that basis, since Serco carried on business in England and Wales, the appeal was allowed so far as the unfair dismissal claim was concerned. The Tribunal had jurisdiction to consider it. We shall consider the EAT's reasoning in relation to regulation 11(5) later in this judgment.
62. What is clear is that no argument was advanced on behalf of Serco, or at any rate considered by the EAT, on what we shall call the substantial connection point, again addressed later in this judgment. Nor, we repeat was the significance of the PWD considered.

PWD

63. We return to Mr Fodder's submissions on this aspect of the case, the point at which we broke off to summarise Bryant and Serco.
64. The PWD (96/71/EC) required Member States to implement its terms by national legislation by 16 December 1999. Member States were to ensure that workers who, for a limited period, carried out work in a Member State other than that in which they normally worked, enjoyed certain rights listed in Article 3. We shall mention four of them:

"(a) maximum work periods and minimum rest periods

(c) minimum rates of pay ...

(f) protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth ...

(g) equality of treatment between men and women and other provisions on non-discrimination."

65. What the list does not include, submits Mr Fodder, is protection against unfair dismissal, contained in domestic legislation in the ERA. Hence the reference by the Minister to our obligations under EU law and the observations of both the President and Pill LJ in Bryant to PWD as a reason for the repeal of section 196 are wholly misconceived.
66. We cannot accept that submission. Article 3.1(f) PWD is concerned with protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth. That is a reference, we are satisfied, to the protection afforded by the Pregnant Workers Directive (92/85/EC). One of the measures contained in the Directive (Article 10) is the requirement on Member States to provide measures to prohibit the dismissal of women workers during the period from the beginning of their pregnancy to the end of their maternity leave. Section 99 ERA, as amended, implements that requirement in domestic legislation, as Ms Proops points out. Dismissal for a reason relating to pregnancy, childbirth or maternity is, in certain circumstances, rendered automatically unfair under section 99(3). Thus removal of the jurisdictional bar imposed on persons ordinarily working outside Great Britain by section 196(2) ensures compliance with UK obligations under the PWD in circumstances where otherwise a pregnant woman, or woman on maternity leave, who is working in this country at the time of her dismissal for that reason would be barred from obtaining relief under section 99 ERA.
67. Further, Ms Proops submits that the right to minimum rates of pay, referred to at Article 3.1 c PWD, is a reference to what in the domestic setting are the National Minimum Wage Regulations 1999, made under the National Minimum Wages Act 1998, enforceable through Part II ERA. We do not think that is a good point since section 1(2)(b) NMWA still requires that, to qualify for the national minimum wage, a person must work, or ordinarily work in the UK under his contract.
68. A more forceful point, in the context of Article 3(1)(a) PWD, may be that the Working Time Regulations 1998, enforceable in part through Part II ERA, implement Working Time Directive 93/104/EC, and there is no limitation of the type still to be found in section 1(2)(b) NMWA. However, in a different context, we note that by regulation 1(2) WTR, those Regulations extend to Great Britain only. A point to which we shall return when considering section 244(1) ERA.
69. Thus, we conclude that the repeal of section 196 ERA is, in part, in order to comply with the UK Government's obligations under PWD. How far that takes us in answering the jurisdiction question is another matter. However, it is worth observing finally, on this part of the case, what amendment was made to the Sex Discrimination Act 1975 (SDA) in order, we are satisfied, to comply with the obligation imposed by Article 3.1. g PWD, equality between men and women.
70. Section 6(2) SDA renders it unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her. Section 10(1) SDA used to provide that employment is to be regarded as being at an establishment in Great Britain unless the employee does his work wholly or mainly outside Great Britain. In order to comply with the PWD an amendment effected by the Equal Opportunities (Employment Legislation) (Territorial Limits) Regulations 1999 S.I. 1999/3163 from 16 December 1999 repealed the words "or mainly" from section 10(1).
71. It follows, as a matter of interest, that on the facts here, had Ms Jackson brought a claim under the SDA, the Tribunal would have had no jurisdiction to consider it. Whether she can bring claims of unfair dismissal and unauthorised deductions from wages under ERA is the question we must now answer.

Regulation 11(5)

72. Quite simply, Ms Jackson's substantive appeal depends on our accepting that the EAT was correct in Serco, as Mr Fodder invites us to conclude, in holding that the repeal of section 196 ERA has resulted in unlimited extra-territorial jurisdiction for Employment Tribunals, save for the requirement that the Respondent resides or carries on business in England and Wales as we have found, dismissing the cross-appeal, is the case with Ghost Inc. We might add that that was also the position in Bryant. He further submits, correctly, that we are not assisted directly by the decision in Bryant, in which the point was not raised by either side.
73. Having carefully considered the reasoning in Serco we are driven to conclude that it should not be followed. We say that for the reasons urged on us by Ms Proops. The first is that the EAT were not, apparently, taken to the judicial guidance on using secondary legislation to construe primary legislation to be found in the speech of Lord Lowry in Hanlon v Law Society [1981] AC 124, 193 G, 194 D, in that the 2001 Regulations were made under section 7 ETA, as the EAT noted in Serco (paragraph 12), and not the ERA, accordingly they do not inform the court as to the correct interpretation of ERA.
74. Secondly, the EAT in Serco was not referred to the well-established principle of statutory construction, that is the rebuttable presumption against the extra-territorial application of UK enactments. cf. Bryant.
75. Thirdly the EAT was wrong in finding (judgment paragraph 14) as Mr Fodder accepts that regulation 11(5)(a) of the 2001 Regulations was enacted to fill a gap intentionally left by the repeal of section 196 only one year before (the 2001 Regulations came into force on 16 July 2001). In paragraph 14 Judge Altman goes on to refer to a difference in wording between the 2001 Regulations and their 1974 predecessor. That, of course, omits any reference first to the 1985 Regulations and, pertinently to the 1993 Regulations which the 2001 Regulations immediately succeeded. Regulation 8(3) of the 1993 Regulations is precisely replicated in Regulation 11(5) of the 2001 Regulations. The wording of regulation 11(5) was therefore not influenced by the repeal of section 196 ERA.
76. For these reasons we reject the reasoning in Serco and the basis of Ms Jackson's appeal. Having done so we shall proffer our own view of the purpose and effect of regulation 11(5), conscious, of course of the inherent dangers implicit in obiter remarks (see Dunnachie v Hull City Council [2003] IRLR 384. Burton P).
77. Section 244 ERA, to which we shall come next, provides so far as is material:

"244 Extent

(1) ... this Act extends to England and Wales and Scotland but not to Northern Ireland."

78. Under section 7 ETA the Secretary of State did not make one set of Procedure Regulations, to apply to proceedings in England, Wales and Scotland, to which, among other things, the provisions of ERA apply equally (compare Northern Ireland, which has its own separate, equivalent employment protection legislation) but two sets. The 2001 Regulations, applying to England and Wales and what we shall call the 2001 Regulations, Scotland applying to that country.
79. The reasons for the two sets of Regulations do not matter but, for example, they provide, respectively for separate Presidents of the Employment Tribunals of England, Wales and Scotland. Significantly, we think in the present context, is that whereas regulation 11(5)(a) of the 2001 Regulations, provides that the rules of procedure scheduled to the Regulations apply in proceedings to which they relate where one or more Respondents reside or carry on business in England and Wales, the equivalent provision in the 2001 Regulations, Scotland substitutes Respondents who reside or carry on business in Scotland. The key lies in the Transfer of Proceedings provisions contained in rule 21 of the respective rules of procedure contained in Schedule 1 to the respective sets of Regulations. Quite simply, where the Respondent resides or carries on business in England and Wales a complaint should be heard there; if in Scotland, it should be heard before a Scottish Employment Tribunal. Regulation 11(5)(a) does not confer jurisdiction on the Employment Tribunal to hear a complaint brought under ERA; it merely determines where, if the ET has jurisdiction, the case should be heard.
80. In short, we find the regulation 11(5) argument to be wholly misconceived. In a sense that disposes of the matter, subject to Mr Fodder's argument, by amendment, that this Tribunal's reasons were inadequate. However, we feel it right, in view of the hiatus currently arising from the earlier EAT decisions, albeit both can fairly be said to be decisions reached per incuriam, to offer our own analysis of the true jurisdictional position following the repeal of section 196 ERA.

Section 244 ERA

81. Ms Proops' principal submission below and before us, forcefully echoed, on paper at least in the submissions of Mr Swift in Bishop, is that section 244 is the starting point. ERA extends only to England, Scotland and Wales. It follows, on the basis of ordinary principles of statutory construction that, absent a contrary Parliamentary intention, ERA will only apply to persons and matters within the area of the ERA's extent.
82. It is submitted that, save for the special cases of merchant seamen (section 199) and offshore workers (section 201) the Act should apply only to domestic employment.
83. On this part of the case we prefer the submissions of Mr Fodder. Section 244 was in place before the repeal of section 196, it appeared in identical form when the ERA was passed. It determines the extent of jurisdiction, not its applicability. Under section 196(2) an employee who did not ordinarily work outsider Great Britain could bring a claim under the Act before the Employment Tribunal, which had jurisdiction to entertain it. It follows that such employment was not necessarily "domestic" in the way contended for by Ms Proops. The repeal of section 196 and here we think that the intention expressed by the Minister in Parliament is of limited assistance, was to increase the range of what may loosely be called employment with a foreign element (either the posted worker temporarily working in this country; or the local employee temporarily working abroad) which is covered by the Act. Thus we do not find that the extent provision in section 244, nor the concept of "domestic employment" assists us.

Substantial Connection

84. It is Ms Proops' alternative submission which finds favour with us. We begin with the presumption of statutory construction, that the application of a domestic statute is limited to its geographical extent. Here England, Wales and Scotland. Parliament does not generally legislate for the whole world. However, that presumption may be rebutted. For example, in re Paramount [1993] Ch 223 the Court of Appeal held that section 238 of the Insolvency Act 1986 applied to transactions essentially foreign in nature since the mischief to be avoided was the transfer of funds abroad to evade the Insolvency rules. The relief there sought in a case involving a foreign element will be justified where the defendant is sufficiently connected with England.
85. So it is, we think, in the present case. The repeal of section 196 was not designed, nor did it have the effect, of permitting every employee around the world to bring a claim of unfair dismissal against his employer in this country (with or without the limitation that he happened to reside or carry on business here). Rather, its purpose and effect was to reduce the class of employees, like Mrs Carver, unfairly excluded from the Tribunal's jurisdiction because, under their contracts, they did not ordinarily work in Great Britain. However the general rule of statutory presumption, considered in re Paramount, is subject to the proviso that, in this case, the employment has a sufficient, that is substantial connection with this country. As to how that test is to be applied in other cases, we do not wish to speculate here. What is absolutely clear to us is that on the facts of the present case there is no sufficient connection between Ms Jackson's employment, performed exclusively in the US, following recruitment in that country, for a US corporation, and the UK such as to afford the Employment Tribunal jurisdiction to entertain her complaints brought under ERA.

Mariners and Offshore Workers

86. We have considered the specific provisions of sections 199 and 201 ERA. Take section 199; but for the provisions contained in section 199(7) a seaman employed on board ship at sea would not be able to bring a complaint of unfair dismissal (section 199(4)). That is consistent with the sufficient connection test. However, Parliament has expressly included within the protection seamen working on board ships registered in Great Britain, who are ordinarily resident here and who do not work under their contracts wholly outside Great Britain (shades of section 10(1) SDA, as amended).
87. We find nothing inconsistent in the special provisions contained in sections 199 and 201 ERA with our general conclusion that the presumption that Parliament did not intend to apply ERA extra-territorially is subject to the exception, consistent with the Minister's statement, that employees whose employment has proper or substantial connection with this country will be protected by the Act. That does not include Ms Jackson or Mrs Bryant. Whether or not it covers Mr Lawson is not a matter for us.

Summary

88. It follows that in summary our conclusions on the law are as follows:

(1) The repeal of section 196 ERA did not grant unlimited extra-territorial jurisdiction to Employment Tribunals to consider complaints by employees throughout the world.

(2) The extent of any such extra-territoriality is not limited solely by the provisions of regulation 11(5)(a) of the 2001 Regulations. That provision is simply irrelevant to the question of applicability of the Act. Nor do we consider, to deal with an alternative submission by Mr Fodder, that the residence of the Applicant is relevant, save to the limited extent shown by section 199(7)(c) ERA.

(3) Section 244 is concerned with the extent of the Tribunal's jurisdiction, not applicability. The concept of purely domestic employment is too narrow.

(4) The presumption as to non-applicability outside England and Wales is rebutted to the extent that the employment in question has a sufficient, that is substantial connection with this country.

(5) Insofar as the earlier EAT decisions in Bryant and Serco are of assistance, given the limitations on argument in each, we broadly agree with the legal conclusions expressed by the President in Bryant, as approved by Pill LJ, and not the reasoning in Serco.

Adequacy of Reasons

89. We accept Ms Proops' submission that, in the absence of any complaint by the Applicant as to the sufficiency of the Tribunal's findings of fact, and in the light of our conclusions on the law to be applied to those facts, the reasons ground of appeal fails. The Tribunal's decision on jurisdiction was, in any event, plainly and unarguably right.

Permission to Appeal

90. At the close of oral submissions both Counsel made protected applications for PTA in the event that they lost on the appeal. In view of the previous uncertainty surrounding this difficult and important area we shall grant permission to Ms Jackson to appeal to the Court of Appeal against our ruling dismissing her appeal. We did not understand Ms Proops to formally ask for PTA against our ruling dismissing the cross-appeal but, for the avoidance of doubt, if such application is made we dismiss it. The question as to whether Ghost Inc resided or carried on business in England and Wales was essentially a question of fact for the Employment Tribunal. On their findings of primary fact it is clear to us, for the reasons given earlier, that the Company did reside here.
91. Finally, we should each of us wish to pay tribute to the industry of Counsel and the clarity of the arguments which both put before us.