Mahood v Irish Centre Housing Ltd (Race Discrimination : Vicarious liability) [2011] UKEAT 0228_10_2203

EAT
Mahood v Irish Centre Housing Ltd (Race Discrimination : Vicarious liability)
[2011] UKEAT 0228_10_2203 · 2011-03-22
[22]Mummery LJ, at [50], also expressly approved Elias J's guidance in [53] to [61] of his judgment in the Employment Appeal Tribunal , '58. When the arrangements are genuine and when implemented accurately represented the actual relationship between the parties – as is likely to be the case where there was no pre-existing contract between worker and end user – then we suspect that it will be a rare case where there will be evidence entitling the Tribunal to imply a contract between the worker and the end user. If any such contract is to be inferred, there must subsequent to the relationship commencing be some words or conduct which entitle the Tribunal to conclude that the agency arrangements no longer dictate or adequately reflect how the work is actually being performed, and that the reality of the relationship is only consistent with the implication of the contract. It will be necessary to show that the worker is working not pursuant to the agency arrangement but because of mutual obligations binding worker and end user which are incompatible with those arrangements.’”49. We have not been referred to any authority in which an agency worker has been found to be an employee of the end user for the purposes of employment legislation protecting against discrimination, so as to make the “employer” end user vicariously liable. This is the case even though, for example, section 78 of the Race Relations Act contains a wider definition of employment than is to be found in section 230 of the Employment Rights Act, and employers owe a duty not to discriminate against agency or contract workers or workers supplied by another employer; see section 7 of the Race Relations Act 1976 .50. We now turn to the decision in Muschett . The claimant was an agency worker supplied by an agency under contract to provide temporary workers to the Respondent to work in prisons. The claimant became a cleaner in the laundry department. We think it fair to assume that he was fully integrated into the workforce and the prison service would control not only what work he did but how he did it. He was under contract to the agency which paid him. It was intended that he might in due course become a permanent employee of HM Prison Service. He claimed to have been subjected to discrimination on the grounds of sex, race and religious belief. He also claimed in respect of unfair dismissal and wrongful dismissal. His claim against the agency with whom he had a contract was dismissed and there was no appeal against that. He also claimed against HM Prison Service on the basis that he was an employee. His claim for wrongful dismissal failed, inter alia , as there was no mutuality in his relationship with the prison service. The prison service was not obliged to offer him work, he was not bound to accept the work. Accordingly there was no mutuality. Further, his claims for discrimination failed because he was not employed by the prison service; he was not a contract worker either because he was not employed by the agency. The Court of Appeal considered it was not possible in the circumstances to infer a contract of employment between the claimant and HM Prison Services.51. It seems to us that the position of Mr Toubkin is indistinguishable from that of Mr Muschett; neither was an employee of either Respondent or Synergy and we presume Mr Toubkin was not obliged to accept work from the agency (or from the Respondent) nor were they obliged to provide work for him.52. We bear in mind, however, that it is necessary to give a purposive construction with discrimination statutes; see Jones v Tower Boot [1997] ICR 254 in which the Court of Appeal made clear that the phrase “in the course of employment” was different to and wider than the definition used in tort at common law. A course of employment should be given a wider definition than at common law and there was no need for it to be confined to a wrongful act authorised by the employer or a wrongful unauthorised mode of doing some act authorised by the employer. On the need for a purposive construction see McCowan LJ at 262 G:
“A purposive construction accordingly requires section 32 of the Race Relations Act 1976 and the corresponding section 41 of the Sex Discrimination Act 1975 to be given a broad interpretation. It would be inconsistent with that requirement to allow the notion of the "course of employment" to be construed in any sense more limited than the natural meaning of those everyday words would allow.”
Waite LJ added at page 265:
“The tribunals are free, and are indeed bound, to interpret the ordinary, and readily understandable, words "in the course of employment" in the sense in which every layman would understand them. This is not to say that when it comes to applying them to the infinite variety of circumstance which is liable to occur in particular instances - within or without the workplace, in or out of uniform, in or out of rest-breaks - all laymen would necessarily agree as to the result. That is what makes their application so well suited to decision by an industrial jury. The application of the phrase will be a question of fact for each Industrial Tribunal to resolve, in the light of the circumstances presented to it, with a mind unclouded by any parallels sought to be drawn from the law of vicarious liability in tort.”
The Statutory Defence 53. We would have thought that section 32(3) itself made clear that the defence is limited to matters done in order to prevent a discriminatory act and that it could only have effect therefore, if steps were taken before that act. The language used makes this clear, i.e. the use of the word “took” in the past tense requires the employer to prove what he had done in the past. Accordingly we would have thought that no authority is necessary for this proposition but for the sake of completeness we refer to the cases cited to us; Marks & Spencer plc v Martins [1997] EWCA Civ 3067 and Canniffe v East Riding of Yorkshire Council where Burton J observed that section 32(3) of the 1970 act was directed at those steps which an employer takes in advance of a discriminatory act to prevent it from happening. Similarly in Jones v Tower Boot it was said by the Court of Appeal that the defence was open to an employer, “who has used his best endeavours to prevent such harassment” (our italics). 54. We now turn to deal with a number of cases where the issue of authority of employees or agents has been considered in the context of discrimination claims. In Lana v Positive Action Training in Housing [2000] EAT/245/00 the Respondent agreed to provide the claimant with work experience and for that purpose placed her with a firm where she was subjected to discrimination on the grounds of her pregnancy. The Employment Appeal Tribunal came to the “ineluctable” conclusion that the firm that provided the work experience was acting as the Respondent’s agent for the purposes of section 14 of the Sex Discrimination Act and section 41(2) which made an employer liable for the acts of its agents. 55. Section 41(2) is in similar terms to section 32(2) of the Race Relations Act which we have set out above. At paragraph 32 Mr Recorder Langstaff QC (as he then was) had this to say about the meaning of the word “authority”:
“32. It seems to us that the proper construction of section 41(2) is that the authority referred to must be the authority to do an act which is capable of being done in a discriminatory manner just as it is capable of being done in a lawful manner.” 56. The matter was also considered in the case of Victor-Davis v London Borough of Hackney [2003] EAT/1269/01. 57. The claimant was a social worker in the Respondent’s mental health team. She claimed she had been discriminated against by her team manager. The team manager was not employed by the Respondent but by the local NHS Trust and had been supplied by the Trust to the Respondent to work with the team. The Respondent accepted that she was their agent and thus that it was potentially vicariously liable for her conduct. HHJ McMullen QC, notwithstanding the matter had not been argued, went on to consider the position of the team manager. He said: “We deal with the matter without the benefit of a contested argument, but we will say a few words as we recognise this is an important issue for many in the public service and in the private sector, where an employee may find herself supervised or managed by a person who is not in the same employment but is a contractor or outsource…” 58. Having referred to the Lana case to which we have just referred, Judge McMullen continued: “The proper approach was to consider whether, when doing the discriminatory act, the discriminator was exercising authority conferred by the respondent. 33 We agree with that construction, which must apply equally to section 32(2) of the 1976 Act. We have to add however that a discriminatory act, done by a person without the knowledge or approval of a principal, cannot be deemed to have been done by that person as the principal’s agent and with his authority where the principal has taken such steps as are practicable to prevent the person from doing that act. If it were otherwise, a principal would incur greater liability for acts of an agent than an employer incurs for acts of an employee. This would be contrary to the scheme and purpose of the 1975 and 1976 Acts.” 59. In May & Baker Ltd t/a Sanofi-Aventis Pharma v Okerago UKEAT/0278/09 (HHJ Birtles) the Employment Appeal Tribunal considered a case where the claimant asserted that she had suffered discriminatory conduct for which the Respondent was vicariously liable. The acts in question had been committed by an agency worker employer as a pharmacy inspector, a Ms Dower. It is instructive to set out the facts as to her employment as found by the Employment Tribunal. “She worked under the day-to-day control of the Respondent and worked alongside employees. She had a grade at the Respondent, she was like the Claimant a level 3 inspector and like the Claimant she undertook some level 4 responsibility and was able to take charge of a room. The Respondent treated Terri Dower on a day-to-day basis as it treated other operatives. She underwent training alongside them was obliged to comply with the standard operating procedures and to abide by the company's values. If there was a dispute between workers then the line manager spoke to Terri Dower in the same manner as an employee. For example, Mr Bernard told the Tribunal he had cause to ask Terri Dower to apologise to Balgit for upsetting her. To all intents and purposes she was treated as an employee on a day to day basis and acted as one.” 60. Based on those facts the Employment Tribunal found that the Respondent was vicariously liable for Ms Dower’s actions. On appeal the Employment Appeal Tribunal found there was no evidence to support the finding that to all intents and purposes Ms Dower was treated as an employee on a day-to-day basis and acted as one; nor was there any evidence to justify the finding that she had acted as the Respondent’s agent. The Employment Appeal Tribunal also rejected a submission that an employer would be liable for unlawful race discrimination by a third party where the employer had sufficient control over the circumstances to have prevented it; there was no authority for that proposition and also it had not been argued before the Employment Tribunal; we do not derive great assistance from this case because the Employment Tribunal had no reason to set out the principles relevant to the determination of whether someone in Ms Dower’s position could be regarded either as an employee or agent of the Respondent, however, the facts bear significant similarity to the facts of the present case. 61. After we had retired to consider our decision we were referred by solicitors acting for the Respondent, Messrs Bates Wells and Braithwaite, of the decision of the Employment Appeal Tribunal in Conteh v Parking Partners Ltd [2010] UKEAT/0288. We do not find this case of assistance. It concerned a scenario where the Claimant was working in circumstances where she was exposed to racial abuse by persons over whom the employer had no control. Conclusions 62. We simply do not know what evidence was led as to the nature and circumstances of Mr Toubkin’s employment as these have not been recorded by the Employment Tribunal. All we know is that he was a temporary worker on the books of an employment agency, Synergy, and he worked for the Respondent as a project worker. The relationship between the Respondent and Synergy was such evidently that the Respondent could (and did) require his immediate removal. 63. There is no support in the authorities (particularly Muschett ) for importing into this area of the law the concept of the “temporary worker” used to create vicariously liability at common law in tort. On the facts as known to us (and apparently to the Employment Tribunal) it is clear that Mr Toubkin was not an employee of the Respondent. We do not know whether it was even argued by the Claimant that he had become an employee of the Respondent. As we have said, even if a sufficient degree of control could be established over Mr Toubkin by the Respondent so as to render the Respondent liable at common law in tort for his actions, such has no bearing on issues of liability under employment legislation relating to discrimination. 64. We would suggest that if an Employment Tribunal is to find that an employer is liable for acts of discrimination by an agency worker it would need to give a careful explanation of the facts it has found giving rise to the conclusion that the person in question was acting either as an employee or agent of the Respondent within the meaning of section 32 of the Race Relations Act and similar legislation. 65. If for example it were to be found that he had become an employee of the Respondent as explained in such cases as James v London Borough of Greenwich , it would be incumbent on the Employment Tribunal to clearly set out its findings of fact leading to such a conclusion. 66. Insofar as concerns the question of whether Mr Toubkin was acting as an agent of the Respondent, again we have no findings of fact and simply do not know what submissions were made to the Employment Tribunal. It is clear that some reference must have been made to vicarious liability under section 32 or the Employment Tribunal would have no reason to refer to the statutory defence, and it appears to be conceded that in the Respondent’s skeleton argument (see paragraphs 11 and 12 of Miss McLynn’s skeleton argument) some submissions were made by the Claimant in relation to section 32. It has been suggested by Miss McLynn in her submissions that the Claimant’s case before the Employment Tribunal was that the Respondent was liable for the acts of Mr Toubkin as a third party; however, section 32 does not create liability for the acts of third parties, only for acts of agents and employees. There is some support for Miss McLynn’s contention in the summary of the Employment Tribunal judgment at page 2 of the bundle which refers to the “third party claim against the Respondent” as not being well founded. However, at the end of the day we simply do not know how the case was put. 67. If the point was argued we consider, despite the dicta in Sykes v Millington that we are required to give a purposive construction to discrimination legislation as required by Tower Boot , we would hold that an employer would be liable for the acts of an agency worker exercising authority, or controlled by the Respondent or who has the Respondent’s authority to do the acts in question where those acts are done in a discriminatory manner but are just as capable of being done in a lawful manner. Whether the Respondent would be liable will of course depend on a careful analysis of Mr Toubkin’s authority and what he actually did. We do not consider that on the facts before the Employment Tribunal, as known to us, Mr Toubkin can have been an employee of the Respondent; he could possibly, however have been its agent. 68. We would not consider it right that the parties should be entitled to a complete re-hearing and call fresh evidence and make wholly new submissions and thus be given a second bite at the cherry so as to speak. We remit this matter to the same Employment Tribunal to consider, on the basis of the evidence that was before it, whether Mr Toubkin was acting as an agent of the Respondent with the Respondent’s authority in relation to such misconduct as may be proved towards the Claimant, as explained in authorities such as Victor-Davis and Lana ; i.e. whether Mr Toubkin might have been acting as the Respondent’s agent in the sense that when doing a discriminatory act he was exercising authority conferred by the Respondent. In other words if he had authority to do an act which was capable of being done in a discriminatory manner just as was capable of being done in a lawful manner. 69. It may well be that there was insufficient evidence adduced to enable the Employment Tribunal to come to the conclusion that he was so acting. If, however, the Employment Tribunal does come to that conclusion it will then have to consider whether the Respondent can make out the statutory defence of proving that it took “such steps as were reasonably practicable to prevent the employee from doing that act or from doing in the course of his employment acts of that description”
. The Respondent must have acted, of course, before the matters complained of with a view to preventing such matters occurring. 70. We would conclude by expressing our gratitude to counsel for their helpful written and oral submissions.