The claimant was a project worker with the respondent. He had started working with them even though he had not been subject to a CRB check as required. An agency worker started work with the respondent soon after and who had a difficult working relationship the claimant. The claimant raised a grievance relating to the agency worker's behaviour and the day after, an altercation resulted in the claimant being told to go home by his manager while the dispute was resolved. The agency worker's engagement was terminated but the claimant was also dismissed two weeks later because of the concerns that he had not been CRB checked. The claimant issued proceedings and the ET found that there had been victimisation but dismissed claims of discrimination.

However, as the EAT concluded, the ET made no findings on the agency worker's status in the workforce or what steps the respondent had taken to prevent discriminatory conduct, despite submissions on the vicarious liability point by the claimant. So in this judgment, HHJ Serota conducts a thorough review of the authorities and relevant statutory provisions concerning the position of agency workers and the statutory defence, including Muschett and James.  He concludes that there was no way of knowing the ET's consideration of the nature and circumstances of the agency worker's employment as they had not been recorded. However if the point was argued, and following a purposive construction as required by Tower v Boot, he adds that they would have found the respondent liable. The case was therefore returned to the ET to re-examine the issue on the basis of the evidence before it and if the tribunal did find the respondent liable, to consider whether the statutory defence was made out.

_______________

Appeal No. UKEAT/0228/10/ZT

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 7 January 2011

Judgment handed down on 22 March 2011

Before

HIS HONOUR JUDGE SEROTA QC; MRS L TINSLEY; MR B WARMAN

MR T MAHOOD (APPELLANT)

IRISH CENTRE HOUSING LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR D STEPHENSON (of Counsel)

Instructed by:
The London Discrimination Unit
Lambeth Law Centre
The Co-op Centre
Unit 4, 11 Mowll Street
London
SW9 6BG

For the Respondent
MS L McLYNN (Solicitor)
Messrs Bates Wells & Braithwaite LLP Solicitors
Scandanavian House
2-6 Cannon Street
London
EC4M 6YH

RACE DISCRIMINATION – Vicarious liability

An employer is only liable for the discriminatory acts committed by an agency worker who became part of its workforce if either:

1. he became its employee as defined in cases such as, James v London Borough of Greenwich [2008] ICR 545, or,

1. if he acted as the employer's agent in the sense that when doing a discriminatory act he was exercising authority conferred by the employer. In other words if he had authority to do an act which was capable of being done in a discriminatory manner just as it was capable of being done in a lawful manner.

1. This is an appeal by the Claimant from a decision of the Employment Tribunal at Watford (Employment Judge Bedeau and lay members). The judgment was sent to the parties on 11 February 2010. The Employment Tribunal held that the Claimant's written complaints dated 14 February 2009 constituted a protected act within the meaning of section 2(1)(a) of the Race Relations Act 1976. It upheld a complaint of victimisation in respect of an instruction to "go home" on 15 January 2009. It dismissed claims for discrimination he had made concerning the behaviour of one Greg Toubkin and upheld a claim in respect of breaches of section 1 of the Employment Rights Act 1996, about failure to supply him with particulars of his contract of employment. This finding is not subject to appeal.

1. At a subsequent remedies hearing the Claimant was awarded compensation for victimisation and injured feelings in the sum of £750 together with interest and a further £700 for failure to provide him with a written statement of his initial employment particulars.

1. On 30 April 2010 HHJ Peter Clark referred the appeal to a preliminary hearing which took place on 13 July 2010 before Keith J and lay members. They dismissed all grounds of appeal save one, namely whether the Employment Tribunal directed itself correctly in determining whether or not the Respondent was vicariously liable for alleged acts of harassment by Mr Toubkin. Keith J observed that he was surprised at the finding relating to victimisation, an observation with which we respectfully agree. However, as noted by Keith J there is no cross-appeal so we say no more about the matter.

1. We take the factual background largely from the decision from the Employment Tribunal and insofar as is relevant to this appeal. The Respondent is a small charity which operates as a Housing Association that provides supported housing for vulnerable individuals. Because of its work with vulnerable individuals staff are required to have a satisfactory CRB clearance.

1. The Claimant described himself as being of Irish national origin and a protestant by religion. He learned of a vacancy for a project worker with the Respondent and applied for the post. When he completed the application form on 6 July 2008 he answered a question as to whether he had previous convictions in the negative. In fact, he had a number of previous convictions:

* On 29 March 1985 for attempting to obtain property by deception he was fined £100. * On 1 July 1986 he was given a conditional discharge for 12 months for two offences of shoplifting and two offences of failing to surrender to bail. * On 23 March 1987 for three offences of theft and two offences of failing to surrender to bail he was fined (for the theft offences). * On 25 May 1988 for the offence of burglary he was imprisoned for 6 months. * On 2 May 1989 he was imprisoned for six months concurrently suspended for two years for an offence of theft and two offences of obtaining services by deception. * On 6 June 1989 he was imprisoned for six months for two offences of burglary and two offences of obtaining property services by deception together with one offence of criminal damage. * On 25 May 1995 for an offence of burglary he was fined £1,000.

1. The offence for which he was sentenced on 25 May 1995 was committed when he was 29 years of age. There is a five year rehabilitation period in respect of fines.

1. The Claimant was offered and accepted a temporary position on or about 14 July 2008 as a project worker and from about 18 August 2008 he worked as a temporary hostel support worker in the front of house while the incumbent was away from his post for six months. His appointment was subject to references and a CRB check that the Respondent put in hand.

1. The Respondent's principal client was the London Borough of Camden which provided the Respondent with an income of some £850,000 per annum. The service contract between the Respondent and the London Borough of Camden required the Respondent to provide enhanced CRB checks on its staff on a regular basis. For some reason, which is unexplained as far as we are concerned, no CRB check on the Claimant was ever completed.

1. On 24 November 2007 the Respondent was short of staff and it took on a temporary worker, one Greg Toubkin as a temporary worker through an employment agency, Synergy Group. He was taken on as a temporary project worker. There was little evidence in the decision as to the nature of Mr Toubkin's contractual relations (if any) with either the Respondent and Synergy Group or between the Respondent and Synergy Group. Synergy Group must have had some contractual relationship with Mr Toubkin but we assume it was not a contract of employment and we also assume that Synergy Group placed him with the Respondent, charged the Respondent for the supply of his services and then paid Mr Toubkin. If this was a standard placement of an agency worker we again assume that Mr Toubkin would have been under no contractual obligation to accept work from Synergy Group and Synergy Group was not obliged to offer him work. The way in which these agency placements work is described in such cases as James v London Borough of Greenwich [2008] ICR 545 and [Muschett v HM Prisons Service]() [2010] IRLR 451. We shall refer to these cases later in this judgment.

1. The relationship between the Claimant and Mr Toubkin was, in the words of the Employment Tribunal, "not a constructive one". The Claimant complained that Mr Toubkin had made derogatory remarks about protestant people and suggested they should be deported from Ireland, should not have the right to vote. He mimicked the Claimant's accent, made comments like, "Tommy thinks he is British", and stated that the Irish were responsible for slavery. He would, so it was said, interrupt the Claimant's conversation and would make aggressive comments to him. The Claimant considered Mr Toubkin's behaviour was both aggressive and intimidating. The behaviour is said to have lasted between three and four weeks. On 14 January 2009 the Claimant took out a grievance against Mr Toubkin which was referred to Mr Marland (the Respondent's Supported Housing and Services Manager) and Ms Princess Okwuonu, the Assistant Manager. They met Mr Toubkin; he was warned that his behaviour was unacceptable and that Synergy Group would be informed.

1. On 15 January 2009 an altercation took place between the Claimant and Mr Toubkin while both were engaged in front of house duties. Mr Marland decided that until the dispute was resolved the Claimant should go home. There is a dispute between the parties as to what exactly was said between Mr Marland and the Claimant but it matters not so far as this appeal is concerned; see decision of the Employment Tribunal paragraph 6:8 – 6:10. In any event, Mr Toubkin's engagement was terminated.

1. Mr Marland was concerned at the delay in obtaining the CRB clearance in respect of the Claimant. The absence of this clearance had the effect of significantly restricting the Claimant's ability to work with clients. After giving notice on 21 January 2009 that the matter must be sorted out by 30 January 2009 or his placement would be terminated, he proceeded to terminate the Claimant's employment as of 30 January 2009 unless the CRB clearance had been obtained by then.

1. On 16 March 2009 the Claimant issued a grievance and maintained he had been subject to discrimination and victimisation leading to a discriminatory dismissal. His grievance was dismissed as was his appeal.

1. The Employment Tribunal made no findings as to the status of Mr Toubkin within the Respondent's workforce nor what, if any, steps the Respondent had taken to prevent discriminatory conduct by persons who worked for it (to use a neutral expression) and we simply do not know what evidence in relation to Mr Toubkin's status was deployed before the Employment Tribunal. It seems clear that the Claimant made certain submissions as to his status because it submitted before the Employment Tribunal that the Respondent was vicariously liable for Mr Toubkin's conduct. It is apparent from the Respondent's skeleton argument at the Employment Appeal Tribunal, dated 19 May 2007, paragraphs 11 and 12, that the Respondent had sought to answer the claim by asserting that the Respondent could not have been vicariously liable for the conduct of Mr Toubkin because he was an agency worker and could not properly be categorised as the agent of the Respondent.

1. Miss McLynn, who appeared on behalf of the Respondent, submitted to us that before the Employment Tribunal the Claimant had submitted that the Respondent was in some way vicariously liable for Mr Toubkin's actions as a "third party".

1. The Employment Tribunal set out the facts as we have outlined them above. It then directed itself as to the law. The Employment Tribunal directed itself by reference to section 2 and section 4 of the Race Relations Act 1976 and the corresponding provisions to be found in the Employment Equality (Religion or Belief) Regulations 2003. It also directed itself insofar as concerned unlawful victimisation to Nagarajan v London Regional Transport [1997] EWCA Civ 2671 and Oyarce v Cheshire County Council [2008] IRLR 653. At paragraph 14 the Employment Tribunal went on to refer to section 32 of the Race Relations Act **and the corresponding Regulation 22 of the Employment Equality (Religion or Belief) Regulations.

1. We need to set out paragraph 14 of the decision:

"Section 32 RRA and Regulation 22 of the 2003 Regulations, provides for liability of employers and principals for the acts of others. The defence is whether reasonable steps were taken to prevent the unlawful acts."

1. This is the only reference in the judgment to the law relating to vicarious liability. It is not altogether adequate as it fails to make clear that vicarious liability exists only in respect of employees and agents of the employer and that there is an extended definition of "employment" in section 78 of the Race Relations Act **(mirrored in Regulation 3 of the Regulations).

1. The Employment Tribunal concluded that the Claimant's grievance was a protected act, that the instruction by Mr Marland on 15 January 2009 that the Claimant should "go home" constituted victimisation. As we have already said, both Keith J and we are surprised at this decision, but as we have said there is no appeal against that finding.

1. The Employment Tribunal went on to find that the Claimant's dismissal was not as a result that he had done a protected act but was because of the absence of CRB checks.

1. The numbering of the decision of the Employment Tribunal is somewhat awry and there are two paragraphs numbered 16. The second of those paragraphs contains the decision as regard "the Claimant's claim in respect of third party liability, that being based on the Respondent's actions for Mr Toubkin".

1. The Employment Tribunal expressed itself in these terms:

"As regards the claimant's claim in respect of third party liability, that being based on the respondent's actions for Mr Toubkin, we are satisfied that it did take reasonable steps to prevent further discriminatory acts. Mr Toubkin had been warned about his behaviour during his meeting with Mr Marland and Mr Okwuonu. It was clearly stated to him on 14 January, that his behaviour was unacceptable in respect of the matters that occurred on that day. In respect of the events during the morning on 15 January, it was investigated by Mr Marland and Mr Toubkin's contract was terminated. Within twenty four hours of the matter being first reported to Mr Marland, Mr Toubkin's employment was terminated. We, therefore, do not find that the respondent is liable for the actions of Mr Toubkin. It had taken the reasonable step to warn him and when there was reason to question his behaviour, his contract was terminated."

1. Regrettably the Employment Tribunal chose not to set out the submissions that the parties had made on the basis, apparently, that it was not required to do so by rule 30(6) of the Employment Tribunal Rules which require certain specified matters to be set out; parties' submissions are not one of these. Although it is not mandatory for an Employment Tribunal to set out the parties' submissions in many cases it is highly desirable, if not essential that the relevant submissions should be set out, not least to enable the Employment Appeal Tribunal or another court dealing with an appeal to understand the reasoning of the Employment Tribunal. An Employment Tribunal that fails to set out those submissions can fall into error as has happened in this case, where the Employment Tribunal (a) misdirected itself as to the statutory defence (b) failed to deal with the issue as to whether the Respondent could be vicariously liable for Mr Toubkin notwithstanding that he was an agency worker (c) deprived the Employment Appeal Tribunal of the opportunity of knowing what points were argued and which were not; for example, here it is maintained by the Respondent that the Claimant did not in fact seek to found vicarious liability on the basis that Mr Toubkin was an employee or agent of the Respondent, notwithstanding that the Employment Tribunal clearly considered the point.

1. We draw attention to the fact that Lord Phillips in English v Emery Reimbold [2002] 1 WLR 2409 paragraph 19 made clear that if the appeal process is to work satisfactorily the judgment must enable the appellate court to understand why the lower court reached its decision.

1. Before we refer to the parties' submissions it may be helpful if we set out the relevant statutory provisions. We set out the provisions of the Race Relations Act 1976 which are mirrored in the Employment Equality (Religion or Belief) Regulations 2003, save that the prohibited act is not discrimination on the grounds of race but on grounds of religion or belief. Section 2(1) of the Act provides as follows:

"2 Discrimination by way of victimisation

(1) A person ("the discriminator") discriminates against another person ("the person victimised") in any circumstances relevant for the purposes of any provision of this Act if he treats the person victimised less favourably than in those circumstances he treats or would treat other persons, and does so by reason that the person victimised has—

(a) brought proceedings against the discriminator or any other person under this Act; or

(b) given evidence or information in connection with proceedings brought by any person against the discriminator or any other person under this Act; or

(c) otherwise done anything under or by reference to this Act in relation to the discriminator or any other person; or

(d) alleged that the discriminator or any other person has committed an act which (whether or not the allegation so states) would amount to a contravention of this Act,

or by reason that the discriminator knows that the person victimised intends to do any of those things, or suspects that the person victimised has done, or intends to do, any of them."

1. The relevant regulation is 22.

1. Section 3A provides as follows:

"3A Harassment [...]

(2) Conduct shall be regarded as having the effect specified in paragraph (a) or (b) of subsection (1) only if, having regard to all the circumstances, including in particular the perception of that other person, it should reasonably be considered as having that effect."

This corresponds to regulation 5.

1. Section 32 of the Act provides as follows:

"32 Liability of employers and principals [...]

(3) In proceedings brought under this Act against any person in respect of an act alleged to have been done by an employee of his it shall be a defence for that person to prove that he 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."

This corresponds to regulation 22.

1. Employment is defined in section 78 (corresponding to Regulation 2:3):

"employment" means employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly;

1. It is important to bear in mind for a Respondent to be vicariously liable for the acts of a member of his staff (using a neutral term) under section 32 or regulation 22 and to avail himself of the statutory defence, the acts in question must be done by an "employee" or someone acting as his agent.

1. It was submitted to us by Mr Stephenson [who did not appear in the Employment Tribunal], who appeared on behalf of the Claimant, that the Employment Tribunal having apparently accepted that the Respondent was vicariously liable for the activities of Mr Toubkin had fallen into error by holding that the Respondent was entitled to rely upon the statutory defence on inappropriate grounds. The finding of the Employment Tribunal was based on what the Respondent had done after the discriminatory acts rather than before, as required by the statute. If in fact and in law the Respondent was potentially vicariously liable Mr Stephenson's point appears to be unanswerable and would require, as he submits, remission to the Employment Tribunal for reconsideration.

1. He submitted that the statute itself made clear that it was the employer's conduct before the discriminatory actions that was required to be proved for the defence to be applicable. The Respondent must have acted so as to prevent the employee from doing the act in question. If authority were needed for the obvious, because the statute was quite clear, we were referred to Marks & Spencer plc v Martins [1998] ICR 1005 and Canniffe v East Riding of Yorkshire Council EAT/1035/98.

1. This submission was not challenged by the Respondent whose principal point was that it was impossible on the facts for the Respondent to be vicariously liable under the statutory provisions we have mentioned, for the actions of Mr Toubkin.

1. Miss McLynn submitted that the Respondent could only be liable if Mr Toubkin was its employee. He was an agency worker and was neither an employee nor an agent of the Respondent so the Respondent could be under no liability. This submission is unsatisfactory in many ways, not as a submission of law, but because we simply do not know what submissions were made before the Employment Tribunal and we do not know the Employment Tribunal's reasoning in relation to issues of vicarious liability.

1. The Respondent submits that the Claimant never sought to argue whether Mr Toubkin should have been treated as an employee; it confined its submissions, so we were told, to the proposition that Mr Toubkin was liable as a third party. It was never suggested that the Respondent was liable for him as its employee or agent. The difficulty with this argument is that the Employment Tribunal clearly had in mind that possibility of vicarious liability and did not reject the Claimant's case on the basis there was no potential vicarious liability, but only because the Employment Tribunal was satisfied the Respondent could avail itself of the statutory defence. She went on to submit that the Employment Tribunal never found that Mr Toubkin was either the employee or agent of the Respondent. Furthermore, even if the Employment Tribunal did find there was potentially vicarious liability, it was wrong to do so because the term "employee" and "employment" in the legislation, particularly at section 78 provided that an employee could only be liable for the actions of an employee strictu sensu. The statute clearly imposed liability for the acts of employees and agents only; there was no reference to other third parties. Reliance was placed on [May & Baker Ltd t/a Sanofi-Aventis Pharma v Okerago]() UKEAT/0278/09.

1. A distinction needed to be drawn between the statutory scheme for vicarious liability for the statutory torts created in discrimination statutes and at common law; our attention was drawn to Tower Boot v Jones [1996] EWCA Civ 1185. Employment for the purposes of vicarious liability under both the Act and the Regulations was limited to employees and agents and did not include agency workers. Miss McLynn also relied upon Muschett v HM Prisons Service [2010] IRLR 451. That case, it was submitted, limited the definition of the term "employee" in a case where an agency worker was working in the prison service but was held not to be an "employee" for the purposes of the Race Relations Act. It was further submitted to us that an agency worker would have no agency relationship with the Respondent.

1. Mr Stephenson drew our attention to the case of Victor-Davis v London Borough of Hackney EAT/1269/01 and to Lana v Positive Action Training in Housing EAT/245/00.

1. If the Respondent's submissions are correct no claim could be made against an "employer" for discriminatory torts committed by an agency worker. Accordingly the Employment Appeal Tribunal should adopt a broad and generous construction of the statutory provisions to prevent such an anomaly. For example, if an agency worker could at common law render his "employer" vicariously liable for torts committed against third parties, it was absurd that the "employer" should not be liable for acts of discrimination. Our attention was drawn to Hawley v Luminar Leisure [2006] EWCA Civ 18. He maintained the issue of vicarious liability had been raised before the Employment Tribunal so the Employment Tribunal was entitled to deal with the question under section 32 of the Act.

1. The position and status of agency workers in employment law is still unclear particularly in relation to employment protection and discrimination. By way of background it should be noted that an employer will only be liable for torts committed by an agency worker or some other temporary member of his workforce in the employment of another or who is self-employed, if he both controls the work to be done but also the method of performing it. See the classic speech of Lord Porter Mersey Docks Harbour Board v Coggins and Griffith [1947] 1 at page 17. In such circumstances Denning LJ said in Denham v Midland Employers' Mutual Assurance Ltd [1955] 2 QB 437 at page 443 in relation to temporary unskilled workers, "the labourer becomes so much of the organisation to which he is seconded that the temporary employer is responsible for him and to him". The rationale for the liability of a temporary employer was that the worker in question had become his temporary employee and he had become the temporary employer of the workman.

1. We referred the parties to the decision of the Court of Appeal in Interlink Parcels Ltd v Night Trunkers Ltd & Anor [2001] RTR 23, a case seemingly not referred to in either Chitty or Harvey. In that case Night Trunkers had provided drivers to Interlink who were under the day-to-day control of Interlink and drove its lorries and wore its uniform. Interlink asserted that its contract with Night Trunkers was unlawful because its vehicles were driven by Night Trunkers' employees and accordingly Interlink lorries would be driven by a person other than its own "servant or agent" as required by the relevant statute. Night Trunkers argued in the circumstances that the drivers had become temporary employees or agents of Interlink. It relied upon the dictum of Goddard LCJ in Sykes v Millington [1953] 1 QB 770 at 775, who said:

"A man cannot be the servant of A and the agent of B in performing the same piece of work. He is either the servant of A or the servant of B. If my servant is driving my car as my servant, the mere fact that I have lent the car to a friend and told my driver to drive him, does not make the driver an agent. He remains my servant all the time. There might be certain circumstances in which a person driving the car would not be the servant because the relationship of master and servant had changed, but there was no evidence here on which the justices could find that the drivers were the servants of any person except the respondent. Therefore, they could not find that they were the agents of the company."

1. The Court of Appeal held that Interlink exercised sufficient control over the actions of the drivers that they became its temporary employees and thus no offence would be committed.

1. Arden LJ quoted with approval an extract from Chitty on Contracts, volume 2, 28th Edition 1999 at paragraph 39/026 contributed by Professor M R Freeland.

"Special cases: (2) agency workers.

Where, as now happens in an increasingly wide range of occupations, employment is obtained via an employment agency, radically divergent analyses of the legal relationships may occur. The worker may be held to have contracted with the agency and not with the client under whose control he is placed. In other cases, the worker may be held to have contracted with the client and merely to have received an introduction from the agency. On either view, it has then to be decided whether the worker is an employee. It has been suggested that in the case where the worker is under contract with the agency, there is a sui generis type of contract for the provision of services to a third party. It has also been held that where temporaries on the books of an employment agency were under no obligation to accept bookings offered by the employers, who in turn had no obligation to accept bookings offered by the employers, who in turn had no obligation to find work for their temporaries, the relationship between the employers and the temporaries lacked the elements of continuity and care associated with the contract of employment. Some labour-only sub-contracting arrangements are comparable to employment via an agency, and both systems can raise problems in so far as they can involve the avoidance of the ordinary legal consequences of employment under contracts of employment. For further discussion of the question whether and when an agency worker has a contract of employment either with the agency or with its client business to which the agency sends the worker, and for the assertion that there is no rule of law against there being a contract of employment either with the agency or with the client business, see now McMeechan v Secretary of State for Employment. . . [1997] 1 I.C.R. 552."

1. Secretary of State for Employment v McMeechan [1997] IRLR 353 was a case in which the Claimant was held to have been employed by an agency which provided his services to end users as a temporary catering assistant. There is no suggestion that he may have been employed by the end user. Arden LJ also considered whether the drivers, if not the temporary employees, of Interlink could be said to be its agents.

1. Before we turn to consider further her judgment we note that there have been other recent cases where "employers" have been fixed with liability in tort for acts of agency workers or persons employed by others; see Dubai Aluminium Company Ltd v Salaam [2003] 2 AC 366 and Viasystems (Tyneside) Ltd v Thermal Transfers (Northern) Ltd [2005] EWCA Civ 1151. Those authorities make clear that in certain circumstances both the supplier of the worker and the end user could be vicariously liable for the acts or omissions of the worker if the facts justified a conclusion that both acted as his employer. Another example is Hawley where the Court of Appeal held that a nightclub was vicariously liable for the acts of a doorman supplied by an agency but over whom it exercised control as his temporary employer.

1. Before we leave the issue of vicarious liability and tort, there is authority for the proposition that an employer could be liable for acts of victimisation under section 47B of the Employment Rights Act 1996, which prohibits victimisation of a worker who has made a protected disclosure. This is so even though the victim would have no cause of action against the employees and the employer would not have available to him the defence that he took such steps as were reasonably practicable to prevent the employee from doing the acts complained of; see for example Cumbria County Council v Carlisle Morgan [2007] IRLR 314, and [Fecitt v NHS Manchester]() [2010] UKEAT/0150.

1. To return to the Interlink case, Arden LJ said at para 73:

"Meaning of "Agent"

This question does not now arise and accordingly I express no final view on this point. Suffice it to say that, if my conclusion on the "servant" issue had been different, I am not satisfied that the Judge was in error on this issue. It seems to me that, if the Night Trunkers drivers remained employees of Night Trunkers while operating Interlink's vehicles, and were not temporary deemed servants of Interlink, it was in their capacity as such employees that they drove Interlink's vehicles and (provisionally) I do not consider that they, as opposed to Night Trunkers, can be taken to have assumed responsibility to act as agents of Interlink for the purpose of section 58(2) of the 1995 Act."

1. Hale LJ preferred not to express an opinion on the agency point.

1. We now turn to consider a line of authority that deals with the question as to whether and in what circumstances agency workers might be deemed to have become employees of their end users; these are cases such as Brooke Street Bureau v Dacas [2004] ICR 1437, Cable & Wireless v Muscat [2006] ICR 975 and James v London Borough of Greenwich [2008] ICR 545. We were not referred directly to James but there are extensive citations from the judgments therein in Muschett to which we were referred. We refer to the judgment of Rimer LJ at paragraph 21.

"21. 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 LJJ agreed) pointed out at [23] that:

'… in order to imply a contract to give business reality to what was happening, the question was whether it was necessary to imply a contract of service between the worker and the end-user, the test being that laid down by Bingham LJ in The Aramis [1989] 1 Lloyd's Rep 213, 224:

"necessary … in order to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable obligations to exist." '

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.'"

1. 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.

1. 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.

1. 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.

1. 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."

1. 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).

1. 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.

1. 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."

1. The matter was also considered in the case of Victor-Davis v London Borough of Hackney [2003] EAT/1269/01.

1. 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…"

1. 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."

1. 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."

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. 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.

1. We would conclude by expressing our gratitude to counsel for their helpful written and oral submissions.