Background
This case concerns Dr. Mark Ter-Berg’s appeal against an Employment Tribunal (ET) decision that ruled he was not a worker under section 230(3) of the Employment Rights Act 1996. Dr. Ter-Berg, a dentist, had sold his dental practice to Simply Smile Manor House Ltd in 2013 and continued working under an Associate Agreement.
After his working relationship ended, Dr. Ter-Berg brought claims for unfair dismissal, whistleblowing detriment, and holiday pay, arguing that he was either an employee or a worker. The tribunal initially ruled he was not an employee, and in a subsequent hearing, it also found he was not a worker. Dr. Ter-Berg appealed the worker status decision.
Key Issues
1. Obligation of Personal Service
- To qualify as a worker, an individual must be personally obliged to perform work.
- Dr. Ter-Berg’s contract contained a substitution clause allowing him to appoint a locum in specific circumstances (such as illness).
- The tribunal initially ruled that this clause did not prevent a finding of personal service. However, it later decided that "exceptional facts"—such as the intention of the parties and Dr. Ter-Berg’s previous self-employed status—meant that he was not required to provide personal service.
- The Employment Appeal Tribunal (EAT) found that these "exceptional facts" were not legally sufficient to displace the personal service requirement, and that the tribunal should have concluded that this requirement was met.
2. Inconsistency Between Employee and Worker Status Findings
- The ET had previously ruled that Dr. Ter-Berg was not an employee because he lacked sufficient control over his work.
- It then relied on this finding to rule out worker status, arguing that it would be inconsistent to reach a different conclusion.
- The EAT found this approach incorrect, as worker status has a lower threshold than employee status, and the lack of employment control does not automatically preclude worker status.
3. Mutuality of Obligation and Control
- The ET mistakenly treated the absence of mutuality of obligation (a key factor in determining employment status) as decisive in ruling out worker status.
- The EAT clarified that mutuality of obligation is not a strict requirement for worker status and that the ET erred in treating it as a determinative factor.
4. Client or Customer Test
- The final element of worker status is whether the individual is providing services as part of their own business (i.e., as a contractor) rather than being dependent on a single employer.
- The ET did not fully assess this issue because it had already ruled out worker status based on the previous decisions.
- The EAT ruled that the case must be remitted for the tribunal to determine whether Dr. Ter-Berg was genuinely operating his own business or was economically dependent on the practice.
Employment Appeal Tribunal (EAT) Decision
1. ET’s Decision Was Unsafe
- The EAT ruled that the ET erred in applying the wrong legal tests for worker status.
- It found that Dr. Ter-Berg did satisfy the obligation of personal service requirement, and the tribunal should not have dismissed his claim on that basis.
2. Case Remitted for Reconsideration
- The EAT overturned the ET’s decision and remitted the case for a fresh tribunal to determine whether Dr. Ter-Berg was a worker.
- The tribunal will specifically assess whether his contract meant he was running his own business or was dependent on the dental practice as a worker.
- The case will be heard by a new judge to ensure fairness.
Significance
This case serves as an important reminder that worker status should not be dismissed solely because an individual is not an employee, and these issues needs to be considered independently. Trade union representatives should be aware that the threshold for worker status is lower than that for employment and that substitution clauses do not automatically rule out a personal service requirement. The case also highlights the importance of assessing economic dependency rather than relying solely on contract wording.
Outcome
Dr. Ter-Berg’s appeal was upheld. The case will now return to the tribunal to determine whether he meets the final requirement for worker status under employment law.
