Court of Appeal supports the current thinking on employment status in delivering its judgement in the case of Muschett v HM Prison Service.
The Court heard an appeal from Mr Muschett that he was an employee of HM Prison Service despite being engaged by the recruitment business, Brook Street UK Limited.
Mr Muschett was claiming to be an employee of the Prison in order to claim unfair dismissal, wrongful dismissal and discrimination during his four-month engagement with them. However, when the Court of Appeal viewed the relationship as a whole, it was unable to support Mr Muschett’s arguments and found that he was not employed by the Prison.
In this case, the Court heard that Brook Street UK Limited carried out CRB checks on the workers it supplied to the Prison; any sickness absence would be reported to Brook Street rather than the Prison; in the event of prolonged absence, the Prison would terminate the engagement and request a replacement from Brook Street; Brook Street undertook responsibility for deducting tax and national insurance contributions before paying Mr Muschett (all the Prison need to do was sign the timesheet); and there was no contract between Mr Muschett and the Prison indicating an intention to employ Mr Muschett directly.
The Court of Appeal confirmed that three essential elements must be present in order for there to be a contract of employment:
- The right for the Prison to control Mr Muschett in the provision of the services;
- The obligation on Mr Muschett to provide a personal service; and
- An obligation on the Prison to offer work and an obligation on Mr Muschett to accept that work (what is commonly referred to as a mutuality of obligations).
The Employment Tribunal and Employment Appeal Tribunal took the view that Mr Muschett was subject to the control of the Prison in terms of the daily tasks he undertook because the Prison could dictate what work was undertaken and when. The Prison also provided the tools which it wanted Mr Muschett to use while performing the services.
Further, Mr Muschett was required to provide his personal services whilst working at the Prison as there was no right for him to provide a substitute, nor did he attempt to provide a substitute in practice.
Mutuality of Obligations
However, the relationship could be terminated without notice or liability by either party demonstrated a lack of mutuality of obligations in the relationship between Mr Muschett and the Prison. This was considered significant enough precluded the existence of an employment relationship in this case because the right to terminate without notice had been exercised in practice and all other terms of the contract were exercised sufficiently to demonstrate that the contract accurately reflected the daily working practices in the relationship.
Also, when the Prison terminated its relationship with Mr Muschett, Brook Street found Mr Muschett work with another client on similar terms to his engagement with the Prison.
Length of engagement
The Court of Appeal confirmed that being engaged on a lengthy assignment with a client will not, on its own, be evidence of an employment relationship. This is even the case where it was envisaged to be a temporary/short term assignment at the outset that has lasted longer than anticipated.
The Court of Appeal agreed with both the Employment Tribunal and Employment Appeal Tribunal that despite Mr Muschett’s attempts to secure permanent employment with the Prison, Mr Muschett having undertaken manual handling and induction courses run by the Prison and being issued with a Handbook similar to that issued to the Prison’s employees, these factors were not sufficient to point towards an employment relationship between the parties.
Martin Hesketh, Managing Director of Brookson Limited commented that “This case reaffirms the position that contracts which accurately reflect the working relationship and are implemented in practice can carry significant weight and could win the day for contractors in demonstrating they are not disguised employees of a client”.
“Contractors should make it as hard as possible for anyone to consider the relationship is one of employment rather than an arms length commercial engagement of contractor and client by ensuring that a good contract is in place from the outset and is continually reviewed to ensure it reflects what happens in practice.”
“As ever, it is essential for contractors to seek professional advice to ensure that the contract and their working practices reflect each other and highlight inconsistencies which can be addressed early.”
Pinsent Masons commented that; “Following the EAT's decision in Alstom Transport v Tilson, the Court of Appeal's decision in Muschett v HM Prison is another useful case when considering employment status issues.”
“Reinforcing the principles of the James v Greenwich case, the Muschett decision underlines the point that, where there is a clear intention between the parties, and the contractual documentation reflects that intention, there is no need to imply a contract of employment between an agency worker and an end user. This is the latest is a line of cases to reinforce that fact and should give additional comfort, and certainty, to contract workers and employment agencies”.