Muschett v HM Prison Service

An agency worker becomes an employee of an end-user only where it is necessary to imply a contract of employment to give business reality to the relationship. The worker’s performance of additional duties, training, integration into the workplace or aspiration to permanent employment does not itself establish such a contract. A contract cannot arise from the worker’s unilateral wish.

The extended discrimination-law definition of employment includes a contract personally to execute work or labour. Such a contract for services does not require mutuality of obligation in the sense required for a contract of employment. There must nevertheless be a contract between the worker and the alleged employer, and necessity remains the standard for implying one.

The appellant was supplied by an employment agency to work temporarily for HM Prison Service. The agency paid him, and each participant could terminate the assignment without notice. After HM Prison Service ended the assignment, he brought claims for unfair and wrongful dismissal and for sex, racial and religious discrimination.

The employment tribunal held that he was neither an employee under section 230(1) of the Employment Rights Act 1996 nor employed under the wider definitions in the discrimination legislation. It therefore dismissed the claims for want of jurisdiction. The Employment Appeal Tribunal dismissed his appeal in UKEAT/0132/08/LA.

The Court of Appeal considered whether a contract of employment had arisen by implication and whether the appellant had a contract personally to execute work or labour within section 78(1) of the Race Relations Act 1976 or the equivalent discrimination provisions.

1. The appeal was dismissed unanimously. The employment tribunal’s finding that the appellant remained an agency worker and never became an employee of HM Prison Service was unimpeachable. A contract between an agency worker and an end-user may be implied only where implication is necessary to explain the relationship and create the requisite enforceable obligations. The training, additional tasks, workplace arrangements and prospect of applying for permanent employment were consistent with the existing agency arrangements. A contract of employment could not be created by the appellant’s unilateral wish to obtain permanent employment.

2. An employment judge must be sensitive to the disadvantages faced by a litigant in person and must give that litigant a proper opportunity to present the case. The judge must also ascertain and apply the relevant law. The judge is not, however, required to enter the factual and evidential arena, investigate whether further evidence exists or construct a better case for the litigant. The tribunal had therefore committed no error by deciding the case on the evidence which the appellant chose to present.

3. The employment tribunal had erred by treating mutuality of obligation as a necessary condition of a contract for services within section 78(1) of the Race Relations Act 1976. That error did not affect the result. The wider definition still required a contract between the appellant and HM Prison Service under which he personally undertook to execute work or labour.

4. No such contract for services existed. The appellant had no contractual obligation to work for HM Prison Service, and the evidence did not make it necessary to imply a separate agreement arising from his additional duties or his aspiration to obtain a permanent post. The findings that there was no contract with the end-user were fatal to the discrimination claims under section 78(1) and the equivalent provisions in the Sex Discrimination Act 1975 and the Employment Equality (Religion or Belief) Regulations 2003.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The court upheld the conclusion that no contract of employment or contract personally to execute work or labour existed between the agency worker and HM Prison Service.
2. Employment Appeal Tribunal: His Honour Judge Ansell dismissed the appeal in UKEAT/0132/08/LA.
3. Employment Tribunal: Following a pre-hearing review, the tribunal held that the appellant was neither an employee under section 230(1) of the Employment Rights Act 1996 nor in employment within the wider discrimination-law definitions. It dismissed the claims for want of jurisdiction.