Case law: Independent Hospital Managers

Pugh & Marks v. Cygnet Health Care Ltd [2020] ET 2302269/2019 V

The complainants, Mrs Marks and Mr Pugh, were both Independent Hospital Managers (IHM) and complained to the Employment Tribunal (ET) that they had been unfairly dismissed. Both claims depended on the ET finding that they were employees. The claim of ‘worker’ was not argued.


The ET found that they were not, in fact, employees because the working relationship lacked the obligations on Cygnet Health Care Ltd to provide work which one would expect of an employer. It also lacked the obligation on the employee to carry out the work once accepted, which one would expect of an employee.

The Facts

These IHM’s were engaged to sit on a review panel at various hospitals. The review panel was set up to review and discharge detained patients and those subject to a Community Treatment order. The respondent, Cygnet Health Care Ltd (CHC), had a pool of IHM’s in each region from which they would draw panel members.

Written contract

Both Mr Pugh and Mrs Marks had signed a written contract – Agreement for Appointment of a Hospital Manager. This was for a term of 3 years and stated that the claimant was agreeing to act in a “non-executive and voluntary capacity”. The contract was terminable with 1 month’s notice and they were retained on a “non-exclusive when needed basis” provided that the IHM agreed to be available to act on at least 2 days per month as notified by CHC.

Each would be paid an honorarium of £100 per hearing and reasonable travel and other expenses would be reimbursed. CHC also agreed to indemnify the claimants and declared that the intention of the parties was that they would be independent contractors.

Mr Pugh and Mrs Marks were free to work for other mental health providers and did so and were also free to decline a booking, which they did so on numerous occasions. Mr Pugh attended approximately 75 review hearings in a year and Mrs Marks attended approximately 58.

Mutuality of obligations

The claim was based on there being a global contract between the parties, the case was not pursued on the basis that each individual review hearing was carried out under a separate contract of employment. Mutuality was the one significant area of dispute.

In the contract, Mr Pugh and Mrs Marks were obliged to accept 2 day’s work / training per month but, and this is most important, CHC were not obliged to offer it. In addition, once the claimants had accepted a ‘booking’ they retained the right to cancel it without seeking permission to be released from the booking. The ET held that “The fact that the claimants retained the right to refuse to perform work after they had agreed to undertake it seems to me to be inconsistent with the obligation they would owe were they employees”


There were certain elements of control by CHC but, the claimants had a great degree of freedom themselves. They had freedom to choose which review hearings they attended but, also were expected to exercise their own independent judgement.

Although the IHM’s had been issued with the MHA Code of Practice, the tribunal thought that this was firstly, a form of guidance but secondly, more a reflection of the public nature of the function of the IHM, rather then an indicator of the nature of the relationship.


The tribunal decided that, standing back and looking at the whole picture, Mr Pugh and Mrs Marks were not employees of CHC. The relationship lacked the obligation on CHC to provide work which one would expect of an employer. It also lacked the obligation on Mr Pugh and Mrs Marks to carry out work once accepted, which one would expect of an employee. The parties genuinely intended to enter a relationship that was ‘at arm’s length’.

Published: 16 December 2020