In the recent case of Ter-Berg v Simply Smile Manor House Ltd and others the Employment Appeal Tribunal (EAT) has considered whether a dentist classified in contract as self-employed was an employee and could therefore bring an unfair dismissal claim. The EAT held that the contract between the parties was relevant, but not determinative of this issue.
Dr Ter-Berg is a dentist who owned a group of dental practices. He sold these to Simply Smile Manor House Ltd and subsequently contracted with them to provided dental services. His contract stated that he was not an employee and that when he was ill for more than 20 continuous days, he should provide a locum in his place.
Dr Ter-Berg brought a claim of unfair dismissal against Simply Smile, on the grounds of whistleblowing. In order to succeed in this claim, he needed to show that he was an employee of Simply Smile. The employment tribunal rejected his claim on the basis that none of the elements of an employment relationship were present – the irreducible minimum being personal service, control and mutuality of obligation. Although it was never used, the substitution clause was genuine and was inconsistent with the obligation to provide personal service. Dr Ter-Berg appealed.
Consideration of the contact
Dr Ter-Berg appealed on the basis that the tribunal should not have taken the contract as the starting point of its analysis. The EAT rejected this point and held that, where it is asserted that the written contract does not reflect the reality of what was agreed between the parties, then the tribunal must not confine its inquiry to a consideration of those terms, it must look beyond them to all the relevant circumstances. Provided it does so, it was not wrong for the tribunal to start by looking at the terms of the contract.
Clause excluding employment
Dr Ter-Berg’s second ground of appeal was that the tribunal should have disregarded the provision in the contract that excluded an employment relationship. The EAT rejected this argument.
The EAT made three points. Firstly, if other facts indicate that as a matter of law an agreement is to be classified as falling into a certain category, then a term asserting that it does not, will not make any difference. Secondly, a provision which states which type of agreement the parties have chosen cannot stand if it is apparent that the object of that provision is to defeat the operation of legislation conferring workers' rights. However, thirdly, a court can consider the way the parties have chosen to categorise their relationship, and in a case where the position is uncertain, this can be decisive. The tribunal had considered that the non-employment clause showed the intention of the parties and this reflected the other evidence.
The EAT held that the tribunal had misinterpreted the substitution clause, holding that Dr Ter-Berg had a free choice to substitute for any reason. On the wording of the contract, Dr Ter-Berg could only trigger the substitution clause if he had not provided his services due to ill-health for more than 20 days. Therefore, the appeal about the tribunal’s decision that he was not providing personal service succeeded. The decision was sent back to the tribunal on this basis.
This case is good news for employers, sensibly clarifying that in employment status cases, employment tribunals can start by looking at the contract between the parties. These terms will not be determinative, tribunals must also look at all the relevant circumstances.