Employment law - Employee, worker or other?

Are you certain of the employment status of your staff?

  • Date: 21 November 2012

THE issue of a person’s employment status is becoming a bit of a hot topic in employment tribunals at present. It has long been the case that practices take on locums or associates on a self-employed basis. Being self-employed means that there is no on-going obligation for an employer to oer work, or for an individual to undertake work for that employer. Being genuinely self-employed should mean – in theory – that the person does not even have to undertake the work themselves and can send someone else to do this in their place. How it works in reality in a practice is another matter.

The employment status of an individual is important because certain legal rights only apply to employees, although ‘workers’ do have some limited rights too. Self-employed individuals generally have no employment rights; however they are covered by anti-discrimination laws, by health and safety legislation and by the law that protects wages. This area of employment law is not the easiest to deal with and increasing case law is now concerned with allegedly self-employed individuals.

The most common employment status you will find in a practice will be an employee – who is dened as an individual who has a contract of service. This means that the practice agrees to provide work and the individual agrees to supply their labour personally. This is known as ‘mutuality of obligation’ and the individual works under the practice’s direction and rules – so there is ‘control’ in place. Employees with a contract of service have the highest protection in employment law. Only they have the right to claim unfair dismissal or a redundancy payment.

A ‘worker’ has some rights under employment law, including the right to claim under the Working Time Regulations and to make discrimination claims. They cannot make claims of unfair dismissal or a claim for a redundancy payment. The key requirements for establishing ‘worker’ status is that the individual has to perform work or services personally and cannot send a substitute or sub-contract the work, and are not undertaking the work as part of their own business.

In contrast, self-employed individuals are engaged under a contract for services and there is no obligation for them to undertake the work and no obligation to be oered work. Self-employed individuals cannot make any claims through employment tribunals and their protection is based on normal contractual principles. Their remedy for breach of contract would be to sue through the civil courts.

A recent case that is of particular relevance to practices involved a hospital consultant who carried out business on his own account but was found by the Court of Appeal to be a worker, rather than self-employed.

Dr Westwood was engaged by the Hospital Medical Group Ltd (HMG) to carry out hair restoration surgery on a self-employed basis. When HMG terminated the agreement, he claimed unlawful deductions from wages and holiday pay. The employment tribunal found that he was a ‘worker’ under section 230(3) (b) of the Employment Rights Act 1996, as he had a contract to perform services personally for HMG, which was not his ‘client or customer’. The Employment Appeal Tribunal (EAT) upheld the decision.

An appeal was eventually heard at the Court of Appeal and the judges identied a need to distinguish between individuals who market their services as an independent person to the world in general (who will have clients or customers), and those who are recruited by the ‘employer’ to work as an integral part of the employer’s operations. Applying this test to Westwood, he fell into the second category. HMG could not be regarded as the doctor’s ‘client or customer’ because it had specically recruited him to carry out surgical procedures on its behalf and referred to him in its marketing materials as ‘one of our surgeons’. He was clearly an integral part of HMG’s undertaking and was providing services even though he was in business on his own account and did have other clients or customers of his own.

However, in the case of Knight v Fairway & Kenwood Car Service, more emphasis was placed on the wording of the contract, rather than the actual working relationship. Mr K was a mini cab driver and entered into a written contract with Fairway. The contract expressly stated that K was not an employee and was responsible for paying his own tax and national insurance. It was also made clear that K could work when he liked but there was no obligation for him to do so. K worked seven days a week and generally for several hours per day.

K became involved in a dispute with Fairway and left, claiming wrongful dismissal. The tribunal needed to decide his status in order to rule whether it could hear his claim. Both the tribunal and the Court of Appeal held that K was not an employee – due to insu§cient mutuality of obligation. It was found that K worked seven days for nancial reasons and not because there was an obligation for him to do so.

Determining the employment status of individuals is clearly a bit of a mineeld and, without a set formula to call upon, can cause headaches for a medical or dental practice. So if you have any concerns about the status of an individual in your practice it would be wise to seek legal advice. MDDUS members can contact us on 0845 270 2034.

Liz Symon is an employment law adviser at MDDUS

This page was correct at the time of publication. Any guidance is intended as general guidance for members only. If you are a member and need specific advice relating to your own circumstances, please contact one of our advisers.

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Practice Manager is published twice yearly and distributed to MDDUS practice managers and others with management responsibility in dental and medical surgeries. It features articles on employment law, health and safety, risk as well as profiles of practices across the UK. Browse our current and back issues below.
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