There has been some debate in recent years as to whether or not the written terms between an alleged independent contractor and the recipient of their services hold any weight at all when determining the employment status of an individual.
In the past, it was always thought to be one factor to be weighed up when there was a degree of uncertainty over status, albeit that the reality of the situation behind the contractual terms has always been considered the most important element. More recently, the Uber BV v Aslam case led to speculation as to whether written terms would be relevant at all in such cases or whether they could be completely disregarded.
However, in the recent case of Ter-Berg v Simply Smile Manor House Ltd, the EAT has clarified that the terms of the contract do in fact matter, and can be the starting point for an assessment of employment status.
In this case, Dr Ter-Berg was a dentist who ostensibly worked as a self-employed contractor, but who claimed that he was unfairly dismissed when the engagement ended. It was his assertion that, over time, the relationship between the parties had evolved into one of employment due to integration, control and the requirement to provide services personally.
The Tribunal, as a starting point, looked at the terms of the contract between the parties to help ascertain the true nature of the relationship. The contract in question was a standard form provided by the British Dental Association, which stated that the dentist was not an employee and there was no employment relationship. It also included a ‘substitution’ clause requiring Dr Ter-Berg to find a locum where he was unable to provide his services for 20 days or more “through ill health or other cause”. The Tribunal concluded that the dentist was not an employee and placed particular weight on the existence of the substitution clause, which meant he did not have to provide his services personally.
On appeal to the EAT, Dr Ter-Berg argued that the Tribunal should not have used the contract as a starting point for its analysis of employment status because the Uber case had established that the test for status was a statutory one. The EAT, however, agreed with the Tribunal’s approach and that it was acceptable to look at the broader picture, and that could include the terms of the contract as long as those terms were not included simply to defeat the statutory protections granted to workers and employees.
On the facts of the Ter-Berg case, the EAT said the Tribunal had interpreted the substitution clause incorrectly because they had found it was an unfettered clause, and it clearly was not. It only allowed Dr Ter-Berg to provide a substitute if he was ill or due to some other (similar) cause, so there had to be some fault on his part. He could not simply choose to provide a locum.
This is an interesting decision which perhaps reinstates the importance of the written contract after the Uber decision, i.e. it is permissible to consider the terms of the contract between the parties, and even to do that as a starting point. But the fact remains that all the other factors must be considered, including the statutory test for employment status, and contract terms that do not reflect the reality of the position on the ground may still be disregarded.