Muschett v HM Prison Service

This Court of Appeal considered whether an agency worker became an employee of the end‑user by implication of a contract of employment and whether he fell within the wider statutory definitions of "employment" in discrimination legislation. The court applied the familiar triad for an employment contract (control, personal performance and mutuality of obligation) and emphasised the requirement of necessity to imply a contract. It relied on James v London Borough of Greenwich and related authority that the mere passage of time, induction, training or carrying out duties similar to permanent staff does not, of itself, justify implying a contract where the parties remain governed by genuine agency arrangements.

The court held that although HM Prison Service exercised control and required personal performance, there was no mutuality of obligation: the agency arrangement allowed termination by either the agency, the end‑user or the worker without notice and HMPS paid Brook Street, not the worker. Consequently no contract of employment nor contract personally to execute work for HMPS (for the purposes of section 78 of the Race Relations Act 1976 and analogous provisions) existed, and the discrimination claims and dismissal claims were rightly struck out for want of jurisdiction.

Background and parties: The appellant, Eric Muschett, worked at Feltham Young Offenders Unit from 22 January 2007 to 10 May 2007 after being supplied by the agency Brook Street. He brought claims against HM Prison Service for unfair dismissal, wrongful dismissal and discrimination (sex, racial and religious). He sought to establish that at some point his status became that of HMPS employee or, alternatively, that he fell within the wider statutory definition of "employment" for discrimination claims.

Procedural history: At a pre‑hearing review Employment Judge Byrne (judgment dated 28 November 2007) held that Mr Muschett was neither an "employee" under section 230(1) Employment Rights Act 1996 nor "employed" for the purposes of section 78 Race Relations Act 1976 (and equivalent provisions). The tribunal dismissed his claims for lack of jurisdiction. The Employment Appeal Tribunal (His Honour Judge Ansell, UKEAT/0132/08/LA, judgment 26 August 2008) dismissed the appeal. Permission to appeal to this court was granted by Smith LJ on two limited grounds: whether a contract of employment should have been implied and whether the judge properly applied the wider definition of "employment" in the discrimination legislation.

Issues framed:

• Whether, on the facts and evidence, a contract of employment could be implied between Mr Muschett and HMPS.
• Whether Mr Muschett was "employed" by HMPS under a contract personally to execute work or labour for the purposes of section 78 Race Relations Act 1976 (and analogous discrimination provisions).

Facts and findings below: The agency placed Mr Muschett with HMPS. He underwent CRB clearance and induction, performed cleaning and some additional duties, and expressed interest in permanent employment and applied for a permanent post. Time sheets were signed by HMPS staff but Brook Street paid the worker and could terminate the assignment; similarly the prisoner service could require replacements and the agency and worker could each terminate the assignment without prior notice. Employment Judge Byrne found no written contract with HMPS, that the worker worked pursuant to his contract with Brook Street, that HMPS controlled performance and required personal performance but that there was no mutuality of obligation and no contract personally to provide services to HMPS.

Court of Appeal reasoning: The court reiterated that implication of a contract requires necessity to give business reality (citing The Aramis and James). The mere existence of induction, training, familiarisation, extra duties or the possibility of future permanent employment do not suffice to imply a contract where genuine agency arrangements governed the parties. The tribunal’s factual findings that there was no mutuality of obligation and no contract for personal services were unimpeachable on the material evidence. As there was no contract of employment and no contract personally to execute work for HMPS, the dismissal and discrimination claims failed for lack of jurisdiction. The court also rejected the contention that the employment judge owed an inquisitorial duty to the litigant in person to unearth further factual material, citing limits on such duties.

Relief sought: compensation for unfair and wrongful dismissal and claims for sex, racial and religious discrimination (all struck out for lack of jurisdiction).

Appeal dismissed. The court found that although HMPS exercised control and required personal performance, there was no mutuality of obligation and no contractual obligation by the appellant to provide services personally to HMPS; therefore no contract of employment could be implied and no contract for personal services existed for the purposes of the discrimination legislation. The employment judge’s and the Employment Appeal Tribunal’s findings were upheld as unimpeachable on the evidence.

Employment Tribunal (pre‑hearing review) – Employment Judge Richard Byrne dismissed claims for lack of jurisdiction (judgment sent 28 November 2007). Employment Appeal Tribunal – His Honour Judge Ansell dismissed the appeal (UKEAT/0132/08/LA; judgment 26 August 2008). Court of Appeal: permission to appeal granted by Smith LJ; appeal dismissed [2010] EWCA Civ 25.