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Background: The law groups staff as employees, workers or self-employed and provides different levels of protection. Employees have the most protection and the self-employed the least. Workers are in the middle and are entitled to some statutory rights, including those in relation to the national minimum wage, working hours, annual leave and protection from discrimination. Worker status is different from employment status. Just because someone is not an employee does not mean they are not a worker.
The key requirements for employment status include:
To establish worker status there must be a contract for ‘personal work or service’. This is a lower threshold than employee status, particularly regarding control and mutuality of obligation. Although workers still need to perform the work personally (a promise simply to get the work done by somebody is not enough) they typically have more flexibility than employees and are less integrated into the employer’s business. For example, they will not usually be subject to the employer’s policies and procedures.
Facts: Dr Ter-Berg was a dentist who sold his three dental practices to Simply Smile Manor House Ltd (Simply Smile) but stayed on to work as an ‘associate’ at some of its surgeries. His contract (based on the British Dental Association’s standard contract) explicitly stated that it did not create an employment relationship and included a substitution clause allowing Dr Ter-Berg to arrange for a locum in cases of prolonged absence.
Simply Smile terminated the contract with Dr Ter-Berg and he brought claims in the Tribunal, arguing that he had been an employee or, alternatively, a worker.
Tribunal decisions
The Tribunal held at a preliminary hearing that he was not an employee (see our update here). However, in a (later) separate hearing to determine worker status, the Tribunal again dismissed the employee’s claims. It said that a finding of worker status would be inconsistent with its earlier findings on employment status.
Dr Ter-Berg appealed against this decision.
EAT decision
The EAT upheld the appeal. It said the Tribunal was wrong to assume that since Dr Ter-Berg did not qualify as an employee, he could not be a worker. Tribunals must assess worker status independently rather than simply applying conclusions from an employment status test, or taking the written contractual terms at face value.
The Tribunal made errors, in particular in its findings on:
Substitution and Personal Service: There was nothing to suggest that Dr Ter-Berg was not required to perform the work personally. A substitution clause in his contract (particularly when it was limited) did not mean that he could not be a worker.
Intentions of the Parties: The Tribunal placed too much weight on the fact that the original intention (by both parties) was that Dr Ter-Berg should be self-employed. The EAT clarified that while these intentions can be relevant, they do not determine worker status. Labels such as ‘self-employed’ or ‘independent contractor’ can be misleading, and what truly matters is whether the individual meets the legal definition of a worker in practice.
Implications:
This case serves as an important reminder that worker status should not be dismissed solely because an individual is not an employee. The tests for employment and worker status should be considered independently and the threshold for worker status is lower than that for employment. Substitution clauses do not automatically mean an individual does not meet the personal service requirement for worker status and neither do the parties’ intentions. Whether an individual is a worker will generally depend on how the relationship works in practice.
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