Hello again and welcome to this week’s case. If you missed our February newsletter, you can catch up here.

This week, we delve into the case of Ter-Berg v Malde and Hancock, a significant ruling on employment and worker status. The case explores the fine line between being classified as an employee, a worker, or self-employed, particularly in professional sectors like dentistry.

At the heart of the dispute is whether the Claimant, a dentist who continued working under an Associate Agreement after selling his dental practice, was entitled to worker rights, including protection from unfair dismissal and holiday pay. The case progressed through the Employment Tribunal (ET) and the Employment Appeal Tribunal (EAT), offering key insights into how courts interpret employment relationships beyond contractual terms.

Let’s break down the facts, tribunal rulings, and the broader implications for businesses and individuals navigating employment status disputes.

Background

The Claimant, a dentist, previously owned and operated a group of dental practices before selling them to Simply Smile Manor House Limited in 2013. As part of the sale, he entered into an Associate Agreement, a standard contract used in the dental industry, under which he continued providing dental services.

In 2018, the Claimant filed a claim against Simply Smile Manor House Ltd, asserting that he was either an employee or a worker of the company. He claimed he was unfairly dismissed for making protected disclosures (whistleblowing) and his dismissal was an act of detrimental treatment due to his disclosures. He further claimed that he was owed holiday pay.

 

The Respondent denied that the Claimant was either an employee or a worker.

The Employment Tribunal (ET)

In an earlier decision, the Tribunal found that the Claimant was not an employee, as he had the necessary level of control, integration into the business, and a requirement to perform services personally.

The Claimant appealed this ruling, but a later hearing upheld that he was not an employee or worker.

The reasoning was that clause 36 of his contract, which allowed for substitution under certain conditions, meant he was not obligated to perform services, a key requirement for worker status.

The tribunal also relied on evidence from his initial ET Judgment, including the lack of mutuality of obligation and control, to deny worker status.

The Claimant appealed to the Employment Appeal Tribunal.

The Employment Appeal Tribunal (EAT)

The EAT found several errors in the tribunal’s decision in the second ET Judgment.

The Tribunal incorrectly assumed that since the Claimant did not qualify as an employee, he could not be a worker.

The EAT emphasised that worker status has a lower threshold than employee status, particularly regarding control and mutuality of obligation.

Secondly, the ET misinterpreted the personal service obligation. The tribunal ruled that the Claimant did not meet the personal service requirement because his contract allowed for substitution.

However, the EAT found that Clause 36 only allowed substitution in specific circumstances (e.g. long-term illness), meaning it did not negate personal service.

The correct conclusion, according to the EAT, was that personal service was required, satisfying this key test for worker status.

Thirdly, the EAT found that the ET failed to properly assess control and subordination. The tribunal incorrectly relied on the “lack of control” test for employment as a determinative factor for worker status. The EAT clarified that control matters less in worker status cases and that a lower degree of control can still support a worker classification.

The tribunal should have considered whether the Claimant was in a dependent working relationship rather than just whether he was fully controlled by the company.

The tribunal also gave undue weight to contract wording stating that “no employment relationship exists.” However, the EAT reaffirmed that courts must assess the true nature of the working relationship, not just written contracts.

The tribunal should have assessed whether the contractual terms reflected reality.

The case was remitted to a new tribunal to determine if he met the third element of worker status; whether Simply Smile Manor House Ltd was a client of his business.

Takeaway Points

This case is significant because it reinforces that contractual terms alone do not determine legal status; tribunals must assess the actual working relationship. Worker status is different from employment status. Just because someone is not an employee does not mean they are not a worker.

The reality of the working relationship is more important than contract wording. The tribunal must assess what happens in practice rather than simply relying on contractual terms.

For employers, this ruling highlights the risks of misclassifying workers and the need to ensure that contracts align with practice.

For employees, it serves as an important precedent in challenging unfair classifications to claim workplace rights.