Muschett v HM Prison Service

This appeal, brought with the permission of Smith LJ, raises two issues for the court’s determination. The appellant is Mr Eric Muschett. The respondent is HM Prison Service (‘HMPS’). Mr Muschett commenced a working relationship with HMPS as an agency worker placed with it by an employment agency, Brook Street (UK) Limited (‘Brook Street’). The issue is whether there came a time in his working relationship with HMPS when his status developed into that of its employee.

The need for Mr Muschett to make good that case was so as to enable him to pursue employment tribunal claims against HMPS for compensation for unfair dismissal, wrongful dismissal and sex, racial and religious discrimination. The claims for unfair and wrongful dismissal depended upon his showing that he had been an ‘employee’ of HMPS under a contract of employment (although the former claim appeared hopeless, as he had worked for HMPS for less than four months when it terminated his engagement). The factual strength of his discrimination claims was, on the face of his evidence, also apparently weak, although they have not been the subject of any investigation. His right to advance them depended upon his being either an ‘employee’ of HMPS under a contract of employment or else in its ‘employment’ within the wider sense necessary to be shown by those mounting discrimination claims in an employment context.

In the event, Mr Muschett’s claims were brought to an early full stop because, following a pre-hearing review held at Reading Employment Tribunal on 6 November 2007, Employment Judge Richard Byrne, in a judgment sent to the parties on 28 November 2007, held that he was neither an ‘employee’ of HMPS as defined in section 230(1) of the Employment Rights Act 1996, nor in its ‘employment’ within the wider sense of the definitions in section 82 of the Sex Discrimination Act 1975, section 78 of the Race Relations Act 1976 or regulation 2 of the Employment Equality (Religion or Belief) Regulations 2003. As a result, the judge concluded that the tribunal had no jurisdiction to hear Mr Muschett’s claims and so he dismissed them.

Mr Muschett sought, but was refused, a review of that decision. He also appealed against it to the Employment Appeal Tribunal. His Honour Judge Ansell dismissed the appeal by his judgment delivered on 26 August 2008. The matter now comes before us. At all stages up to the hearing of this appeal, Mr Muschett has acted in person, but he has been fortunate to have obtained the pro bono services of Mr William Hopkin for this appeal, who argued Mr Muschett’s case with tenacity and to whom Mr Muschett owes a debt of gratitude. HMPS was represented by Mr Paul Gott.

I must refer to section 230 of the Employment Rights Act 1996 (which defines an ‘employee’ as someone working under a ‘contract of employment’) and section 78 of the Race Relations Act 1976 (which contains an expanded definition of ‘employment’ for the purposes of the bringing of racial discrimination claims against ‘employers’ under, inter alia, section 4(2)(c), the provision upon which Mr Muschett’s racial discrimination claim depends). Definitions of ‘employment’ in like expanded terms are to be found in section 82 of the Sex Discrimination Act 1975 (for the purposes of Mr Muschett’s claim under section 6(2)(b)) and in Regulation 2 of the Employment Equality (Religion or Belief) Regulations 2003 (for the purposes of his claim under Regulation 6(2)(d)), and there is no need to set those provisions out as well.

Section 230 of the Employment Rights Act 1996 provides, so far as material (omitting its definitions of a ‘worker’, which are not material):

Section 78(1) of the Race Relations Act 1976 provides, so far as material:

For completeness (since they might be thought relevant, although Mr Muschett’s claim to rely on them has been dismissed and is not alive before us), I will also set out the material provisions of section 7 of the Race Relations Act 1976 relating to ‘contract workers’ (again, equivalent provisions are in section 9 of the Sex Discrimination Act 1975 and Regulation 8 of the 2003 Regulations):

Mr Muschett signed a contract with Brook Street on 15 January 2007 and went on to their books. The contract is not before us although other documents refer to its material provisions. On 19 January 2007 Ms Durack, Brook Street’s ‘Temporaries Controller’, wrote to Mr Muschett offering him a ‘temporary position’ working as a cleaner at Feltham Young Offenders Unit (‘the Prison’). The letter informed him that his duties were ‘Laundry’, of the address at which he would be working, of his hours (8.00 am to 5.00 pm, with 60 minutes of breaks), and that no qualifications were required. It continued:

Mr Muschett commenced work at the Prison on 22 January 2007. His working relationship ended on 10 May 2007. He presented his claims to Reading Employment Tribunal on 30 July 2007. He brought claims not just against HMPS but also against Brook Street. Those against Brook Street were also dismissed by the employment judge, the Employment Appeal Tribunal refused him permission to appeal against their dismissal and he has not sought to challenge that decision in this court. That chapter of Mr Muschett’s tribunal claims is therefore finally closed.

In his ET1, Mr Muschett disclaimed that he was ‘an employee’ of either respondent (meaning, I infer, a disclaimer of any employment contract with them), asserting instead that he was ‘a worker providing services to’ the respondents. He described his job with HMPS as ‘cleaner, laundry section worker’. He said in paragraph 5.1, so far as material, that:

Mr Muschett made a witness statement on 2 November 2007 for use at the pre-hearing review. I will quote all he said that was relevant to his claim to have had an employment relationship with HMPS:

Mr Barry Smith, Mr Muschett’s line manager at the Prison, made a witness statement on 5 November 2007, also for the purpose of the pre-hearing review. It was expressly focused on whether Mr Muschett was an ‘employee’ of either HMPS or Brook Street. Mr Smith explained that in 2006 he recognised that the laundry room was short staffed, he so informed Ms Knock in the personnel department, who in turn contacted Brook Street with a view to the provision of a temporary worker. Following their visit to the Prison, Brook Street informed the Prison that they had a worker who had a Criminal Records Bureau (‘CRB’) clearance and could start immediately. Mr Muschett started work as a temporary cleaner on 22 January 2007, was supplied with the tools for the job and attended manual handling and induction courses, which are mandatory for temporary as well as permanent workers. Mr Smith explained that:

Mr Smith continued by explaining that, in the case of sickness absence, an agency worker such as Mr Muschett would normally inform Brook Street, and Brook Street would ask the Prison whether it required a replacement worker. If the absence was likely to be short, the Prison would, as a matter of practicality, normally decline a replacement, since any replacement would also have to be CRB checked and would have to attend both mandatory courses. If the absence was likely to be prolonged, the Prison would terminate the assignment and request a replacement worker. Mr Smith explained that the Prison had no dealings with Mr Muschett with regard to the payment of wages. The Prison had earlier agreed a rate with Brook Street, which it paid direct to it on a weekly basis. Brook Street then paid Mr Muschett and made appropriate deductions for tax and national insurance. All that Mr Smith had to do was to sign Mr Muschett’s time sheet to confirm the hours he worked each week. Mr Smith explained that either Brook Street or the Prison may terminate a temporary worker’s assignment at any time without notice. So can the temporary worker. HMPS terminated Mr Muschett’s assignment on 10 May 2007 following reports from two staff members of his involvement in two incidents with prisoners.

Mr Muschett and Mr Smith both gave oral evidence at the pre-hearing review but we have no note of the evidence they gave.

Coming to the employment judge’s findings of fact, he found: (i) that Mr Muschett had no written contract with HMPS; (ii) that the basis on which he worked for HMPS was in accordance ‘with a contract for services for temporary workers entered into between’ him and Brook Street; (iii) that before he started work, he had to undergo a CRB check and an induction procedure and was provided with a copy of the handbook issued to HMPS’s employees; (iv) that he was under HMPS’s control when he carried out his work and was required to carry it out personally; (v) that he was paid by Brook Street for the work he did for HMPS, was so paid in accordance with the provisions of clause 4 of his contract with Brook Street and had no entitlement to receive any payment from HMPS; and (vi) that he had no contractual obligation to provide services personally to HMPS. The judge referred to clauses 9.1 and 9.2 of Mr Muschett’s contract with Brook Street, which provided that:

After he ceased working for HMPS on 10 May 2007, Mr Muschett worked for other organisations under the terms of his contract with Brook Street, which remunerated him for such work in accordance with that contract.

Dealing first with whether Mr Muschett was an employee of HMPS under a contract of employment, the judge reminded himself that the three ingredients of such a contract were control, personal performance and mutuality of obligation. He found that HMPS controlled Mr Muschett when carrying out his work and that it was a requirement that he must carry it out personally. He also found that HMPS did not pay him, nor was it obliged to. Nor was Mr Muschett under any obligation to work for HMPS, and he could terminate his assignment at any time and without notice. Correspondingly, HMPS was under no obligation to provide him with work. There was, found the judge, thus no mutuality of obligation and so no contract of employment. The judge referred to this court’s decision in James v. London Borough of Greenwich [2007] IRLR 168; [2008] ICR 545 and said there was also no need to consider whether ‘to imply a contract of employment between [Mr Muschett and HMPS]’. This was because the contractual terms in the case were clear and Mr Muschett worked in accordance with them. He also found that Mr Muschett was not an employee of Brook Street, as to which there is now no challenge.

The effect of these findings was that Mr Muschett’s claim for compensation for unfair dismissal and wrongful dismissal must fail and be dismissed. There remained the question whether he satisfied the wider definition of ‘employment’ in section 78 of the Race Relations Act 1976 (and the like definition in the other discrimination legislation). That raised the question whether Mr Muschett had a contract with HMPS personally to do any work for them. The judge was satisfied that, in the absence of any mutuality of obligation, he had no such contract. It followed that the discrimination claims must fail as well. The judge also rejected Mr Muschett’s claim to be a ‘contract worker’ under section 7 of the Race Relations Act 1976 and its equivalent provisions. The reason was that as Mr Muschett was not employed by Brook Street, section 7 was not in play at all.

Mr Muschett was permitted to pursue his appeal to the Employment Appeal Tribunal in respect of his claims against HMPS. In giving permission, Elias J, the President (as he then was), was concerned as to whether the employment judge had adequately considered the wider definition of ‘employment’ in the discrimination legislation. The appeal came before His Honour Judge Ansell, sitting alone, who summarised the employment judge’s findings and conclusions. Judge Ansell recorded the submission that the employment judge ought to have found that it was arguable that there was to be implied between Mr Muschett and HMPS a contract of employment. He referred to James v. London Borough of Greenwich, supra, to which the employment judge had also referred. That is now the leading authority on such questions.

James similarly involved a tripartite arrangement under which an agency worker claimed to have become an employee of the respondent council, the end-user to which she had been assigned. There was no express contract of employment with the council and the question was whether one must be implied. Mummery LJ (in a judgment with which Thomas and Lloyd L.JJ agreed) pointed out at [23] that:

Mummery LJ, at [50], also expressly approved Elias J’s guidance in [53] to [61] of his judgment in the Employment Appeal Tribunal, [2007] ICR 577, from part of which Judge Ansell cited, as will I:

Having cited these passages from Elias J’s judgment in James, Judge Ansell gave his reasons for rejecting the submission that the employment judge had been wrong in failing to find an implied contract of employment between Mr Muschett and HMPS. They were as follows:

Having so despatched the implied contract argument, and with it the claims for unfair and wrongful dismissal, Judge Ansell went on to hold that the employment judge’s finding that there was no contract for the provision of personal services between Mr Muschett and HMPS also disposed of his claim to a legal basis on which to found his discrimination claims. Finally, Judge Ansell agreed with the employment judge that Mr Muschett’s claim to be a ‘contract worker’ (section 7 of the Race Relations Act 1976, and like provisions in the other discrimination legislation) was also unfounded: that was because of the judge’s finding that he had no employment contract with Brook Street.

Smith LJ permitted Mr Muschett to appeal on two grounds. First, but with expressed reluctance, on the ground that Judge Ansell had not applied his mind properly to whether a contract of employment could be implied between Mr Muschett and HMPS. Secondly, on the ground that Judge Ansell had failed to give effect to the wider definition of ‘employee’ in section 78 of the Race Relations Act 1976 and the other anti-discrimination legislation. Smith LJ regarded this ground as important, since if Judge Ansell were right, a worker in Mr Muschett’s position who personally provides services to an end user such as HMPS, but who is not employed by the agency supplying the services, would have no remedy in the discrimination field if the end user were to discriminate against him. She indicated that, but for this second ground of appeal being a proper one, she would not have given permission on the first ground. She refused permission for Mr Muschett to re-open his ‘contract worker’ argument (section 7 of the Race Relations Act 1976).

With that somewhat lengthy prelude, I come to the argument. The essence of Mr Hopkin’s submission on the first ground – implied contract – was that the findings of fact by the employment judge as to Mr Muschett’s working relationship with HMPS were manifestly deficient. He said the judge could, and should, have made findings to the effect that HMPS were using agency arrangements as one means of recruiting permanent staff; that Mr Muschett was inducted, trained and subjected to the same procedures as a more routinely recruited permanent member of staff; and that he was undertaking duties and had responsibilities so far removed from his agency role and so close to those of a true employee that the agency role had become of marginal importance in a consideration of the tripartite arrangement. He referred to the factual matters upon which Mr Muschett relied in his submissions to Judge Ansell in the Employment Appeal Tribunal (referred to in paragraph 24 of Judge Ansell’s judgment, cited above), and said that these considerations should have formed part of the fact-finding exercise in which the employment judge should have engaged. He said that Mr Muschett would not have engaged in any additional ‘non-cleaning’ activities without the expectation that he either had or would be given permanent employment with HMPS. He said that the employment judge fell into error by focusing primarily on whether there was any mutuality of obligation between Mr Muschett and HMPS sufficient to found an employment contract: the judge ought, he said, more properly to have focused on the arrangements existing between Mr Muschett and HMPS with a view to seeing whether there was any contract between them. Once that was done, it would be relevant to decide what type of contract (if any) it was, and whether there was any mutuality of obligation would be relevant to whether it was one of employment. Mr Hopkin’s submission was that, had that been done, the only explanation for the performance by Mr Muschett of the extra duties he performed (in addition to cleaning duties) was that there was a contract between him and HMPS, which he submitted must have been one of employment.

Mr Hopkin also submitted that, to the extent that it might be said that Mr Muschett did not make for himself the case that could have been made for him, the judge owed him a duty as a litigant in person to afford him all proper assistance in making that case, and was under an inquisitorial obligation to unearth the facts that could enable him to arrive at a decision that reflected the justice of the situation.

Building on these submissions, Mr Hopkin’s essential submission to us on the first ground of appeal was that we could and should, here and now, make the finding that the employment judge failed to make, namely that Mr Muschett was an employee of HMPS under an employment contract; or, failing that, we should remit the matter to the employment tribunal for a re-hearing at which proper findings of fact could be made.

In my judgment, there is no substance to this ground of appeal. First, as regards Mr Hopkin’s point that the employment judge had a duty towards Mr Muschett, as a litigant in person, to engage in an inquisitorial investigation of the background facts with a view to assisting Mr Muschett to make a case before the tribunal, I consider that Mr Hopkin overstated the employment judge’s duties.

In Lemas and Another v. Williams [2009] EWCA Civ 360, in a judgment with which Sullivan and Mummery L.JJ agreed, I said this:

Those observations were made in the context of a challenge to a decision of a circuit judge but I consider that essentially similar considerations apply to employment judges. It is not their role to engage in the sort of inquisitorial function that Mr Hopkin suggests or, therefore, to engage in an investigation as to whether further evidence might be available to one of the parties which, if adduced, might enable him to make a better case. Their function is to hear the case the parties choose to put before them, make findings as to the facts and to decide the case in accordance with the law. The suggestion that, in the present case, the employment judge committed some error of law in failing to engage in the sort of inquiry that Mr Hopkin suggested is, in my judgment, inconsistent with the limits of the role of such judges as explained by this court in Mensah v. East Hertfordshire NHS Trust [1998] EWCA Civ 954; [1998] IRLR 531 (see paragraphs [14] to [22] and the cases there cited by Peter Gibson LJ). Of course an employment judge, like any other judge, must satisfy himself as to the law that he must apply to the instant case; and if he assesses that he has received insufficient help on it from those in front of him, he may well be required to do his own homework. But it is not his function to step into the factual and evidential arena.

I would not therefore accept Mr Hopkin’s submission that the employment judge failed to perform some supposed duty to help Mr Muschett to unearth and advance all facts that might have been available to him to aid his case. In any event, Mr Hopkin gave us no indication of what those further facts might have been. Mr Muschett did of course give oral evidence and for all I know he may in doing so have expanded on the contents of his written evidence. As, however, we have no note of that evidence, we have no idea what it was.

All that we do have are copies of the written evidence that was before the employment judge, and I have summarised it above. In my judgment, in the light of that evidence, the employment judge’s finding that Mr Muschett’s status remained at all times that of an agency worker and that it at no point metamorphosed into that of an employee of HMPS under a contract of employment is unimpeachable. The evidence proved that, before starting work at the Prison, he had to undergo two training courses, which the evidence proved was a requirement for both temporary and permanent staff. It also proved that, apart from cleaning, he took on certain other tasks he was asked to do; that from an early stage he expressed the hope of obtaining a permanent job with HMPS; and that he applied for such a position, although his assignment was terminated before the job was filled.

That meagre collection of facts does not begin to justify a finding that Mr Muschett became an employee of HMPS. Mr Hopkin’s submission that Mr Muschett would not have done the extra duties he claims to have done except in the belief that he would become a permanent employee may be true (although I am unaware of any evidence proving it) but is irrelevant. The sea change in employment law over the last half century or so has resulted in remarkable developments; but it still remains the law that an employment contract cannot be created by the mere, and unilateral, wish of the putative employee. There is no basis upon which this court can question the employment judge’s finding that Mr Muschett never became an employee of HMPS. To the extent that this appeal challenges that finding, it is groundless.

As for the second ground of appeal, that turning on the interpretation of the definition of ‘employment’ in section 78 of the Race Relations Act 1976, the point only arises if (as I consider he does) Mr Muschett fails in his claim to be an ‘employee’ under a contract of employment (i.e. a under contract of service: it has not been suggested that he was engaged with HMPS in a contract of apprenticeship). The further question is, therefore, whether he could be said to have been employed under a contract ‘personally to execute any work or labour’ (i.e under a contract for services). Mr Hopkin conceded that that must mean an engagement under such a contract between Mr Muschett and HMPS.

As to that, the employment judge’s finding was that Mr Muschett had no such contract, his findings in paragraph 15 being expressed shortly as follows:

Mr Hopkin’s response to this was that it was nevertheless necessary to imply such a contract between Mr Muschett and HMPS, and he submitted that Mr Muschett’s ‘extra duties (which had to be completed personally) were carried out in exchange for an undertaking to carefully consider an official permanent contract when such a vacancy arose’.

Even if, upon which I express no view, any such implied agreement would have amounted to a binding contract, there was nothing in the evidence that necessitated the implication of such an agreement: and in this context, nothing less than necessity will do. The facts proved no more than that Mr Muschett was a temporary agency worker with HMPS who aspired to apply for a permanent post with them if such came up, of which aspiration HMPS were aware. The bid to deduce from those facts that there impliedly arose an implied contract for services between the parties is, in my judgment, an ambition too far.

I regard Mr Muschett’s section 78 case as without substance, and obviously so. The employment judge found as a fact that, under his working relationship with HMPS, Mr Muschett was under no contractual obligation to HMPS to do any work for HMPS: and that there was no contract between Mr Muschett and HMPS. Those findings were fatal to the claim that Mr Muschett had a contract for services with HMPS.

I would dismiss the appeal.

I agree.

I also agree.