Taken from this thread:
http://www.electriciansforums.co.uk...rcbos-functional-earth-connection-really.html
1) In order for an RCBO to comply with BS EN 61009, the RCBO does not have to have a separate (functional) earth connection. However, the standard specifies that an RCBO which has a separate earth connection must behave in a certain way to conform to the specification, but the separate earth connection is not mandatory. There are RCBOs currently available that do not have a separate earth connection, yet they achieve full compliance and conformity with the standard.
2) The functional earth is used as reference by the internal RCBO electronics to increase the sensitivity, speed of operation and allows the device to detect an earth fault even if the neutral becomes disconnected. Losing the neutral connection is rare event, especially in TN systems that are increasingly common today. The probability of losing the neutral and having an earth fault at the same time, a double fault condition, is statistically small and evaluated by some manufacturers as so small not be of significance when specifying protection devices. In spite of this, there are those who advocate fitting an RCBO with separate earth connection “just to be on the safe side”. The penalties for this theoretical risk are RCBOs with taller form factors and the extra connection which make consumer units and distribution boards cramped and harder to wire, pushing up required connection time and costs. Even worse some electricians don’t know how to terminate RCBOs and it is quite common to find RCBOs with the functional earth connections cut off, this is clearly bad practice for a device where the electronics relies on a earth reference for its sensitivity and speed of operation.
3) Most manufacturers of RCBOs with functional earth fly-leads insist that these leads must be disconnected during insulation testing to avoid damage to the sensitive electronics, and during earth impedance loop testing to avoid misleading results. A minority of manufacturers insist on the disconnection of the neutral fly-lead during testing in addition to the functional earth, it is therefore important to consult manufacturers instructions before testing. Removing and replacing connections adds to the time and cost of testing, however, there are other issues. First, there is the possibility of failing to reconnect the functional earth fly-lead, leaving the device operating under conditions other than those for which is was designed. Secondly, disconnecting fly-leads goes against one of the basic principles of installation testing, which is that the installation should be tested in the exactly the same state as it will be operated in service. However, we often break this aspiration in installation testing.