· 3 min read · Features

Recent judgment highlights loophole in discrimination legislation for agency workers

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The decision of the Court of Appeal that agency workers are not necessarily entitled to protection under discrimination legislation has potentially far-reaching implications.

Discrimination claims can be brought by anyone in employment, which covers those in employment under a contract of service, as well as those under a contract personally to execute any work or labour.

In addition, discrimination laws protect contract workers - that is, agency workers who are employed by the employment agency directly.

It is critical therefore in the context of agency workers claiming discrimination against the end-user to ascertain the exact nature of the relationship to assess whether that individual could bring a discrimination claim or not.

In the case of Muschett vs HM Prison Service, Muschett was supplied by Brook Street (UK) to work as a temporary laundry assistant at a prison (run by HM Prison Service (HMPS). The terms of the assignment between Brook Street and Muschett stated that Brook Street, HMPS or Muschett could terminate it at any time without prior notice.

When his assignment ended, Muschett brought a claim against Brook Street and HMPS for unfair dismissal, wrongful dismissal, sex, race and religious discrimination.

At a pre-hearing review, the employment judge held Muschett was not an employee of Brook Street, but rather he was a temporary worker working under a contract for services. 

The judge also held that Muschett was not an employee of HMPS as there was no mutuality of obligation - Muschett had no obligation to work for HMPS as he could terminate the assignment at any time without notice, and HMPS had no obligation to provide him with any work. There was therefore no employment relationship.

The judge then considered whether a contract of employment could be implied between Muschett and HMPS, by reference to the long line of cases on this issue.  Referring to the most recent of these, James vs London Borough of Greenwich (2007 IRLR 168), the judge considered that it was not necessary to imply a contract of employment between Muschett and HMPS because the contractual terms of the relationship were clear and Muschett worked in accordance with them. On this basis, there was no employment contract in existence, and so Muschett's claims of unfair dismissal and wrongful dismissal could not proceed against either HMPS or Brook Street.

As regards his claims of discrimination, the judge held that Muschett did not satisfy the wider definition of ‘employment' as contained in discrimination legislation (that is, that he was working under a contract for services to provide those services personally).  The rationale (which was later challenged by the Court of Appeal, although it agreed with the conclusion) was that, in the absence of mutuality of obligation, he could not have a contract to do any work personally for HMPS.

The judge also rejected Muschett's argument that he was a contract worker, as Brook Street did not employ him.

The Employment Appeal Tribunal agreed with the employment tribunal that there was no employment contract between Muschett and HMPS, and also that he was not an employee of Brook Street and so could not claim protection as a contract worker.

Muschett appealed to the Court of Appeal on the grounds that:

1. The appeal tribunal had failed to consider whether a contract of employment could be implied between him and HMPS; and

2. The appeal tribunal had failed to consider whether his work fell within the wider definition of ‘employment' under discrimination legislation.

The Court of Appeal dismissed his appeal, effectively saying that he did not become an employee just because he wished to be treated as one. It held that there was nothing that necessitated an employment contract between Muschett and HMPS and there was no necessity to imply one. It also agreed with the tribunal that there was no contract to carry out the work personally, although it disagreed with the tribunal's rationale on this - it had come to this conclusion on the basis that there was no mutuality of obligation (which was not necessary for a contract for services), but the Court of Appeal held that since Muschett was under no obligation to work for HMPS and could terminate his engagement with them at any time without giving notice, he could not be deemed to have to carry out the work personally (as Brook Street could substitute another person for him if he wished to end his assignment). 

The Court of Appeal was mindful that this judgment highlights a loophole in discrimination legislation for agency workers who are neither employed by either the employment agency that supplies them or the end-user.

The consequence of this decision is that agency workers have no statutory protection against discrimination at the hands of the end-user unless they are employed by the agency itself, or they can persuade a tribunal that it is necessary to imply a contract of employment between them and the end-user (this might be unlikely where the contractual arrangements adequately describe the working relationship between the parties), or a contract for services exists to supply services personally to the end-user.


The Equality Bill (which the Government is aiming to bring into force later this year) plans to tie the various pieces of discrimination legislation together but as currently drafted, it does not address this issue. Nor does the agency workers legislation stemming from the Temporary Workers Directive, which covers employees and ‘workers' (which also implies that the services must be required to be carried out personally by the individual). We await developments with interest

Christopher Hitchins is a partner and Ashley Cara Brown an associate in the Labour and Employment team at the London office of international law firm Morgan