This is a topic which is regularly under the spotlight and in last week's English Court of Appeal decision in The Hospital Medical Group v Westwood (2012) the employee v non-employee theory was yet again put to the test.
In this case, Dr. Westwood (a General Practitioner in a small local high street surgery) was directly approached by the Hospital to undertake minor non-surgical operations in hair restoration and to perform these services alongside his general practice role. He was not issued with a contract of employment but instead entered into a 'contract for services' this set out the basic terms upon which he would provide hair restoration services to patients of the Hospital. In this contract Dr. Westwood was expressly described as a "self employed independent contractor". At no time did Dr. Westwood take issue with this description. However, following the Hospital's unexpected termination of the contract some four years later, Dr. Westwood sought to exercise his alleged statutory rights including the right not to be unfairly dismissed, the right to accrued holiday pay and the right not to have unlawful deductions; these statutory rights only being conferred on employees.
The Hospital launched a vigorous response claiming that Dr. Westwood was at no time an employee and therefore the fundamental statutory protections afforded only to employees did not apply; Dr. Westwood was an independent contractor and this was the parties understanding when entering into the contract for services.
The Court of Appeal disagreed with the Hospital's line of argument and ruled in favour of Dr. Westwood. Despite not having a written contract of employment it was abundantly clear on the facts of the case that he was an employee within the meaning of the employment legislation and therefore should be afforded the relevant statutory protections. In reaching its decision, the Court applied the "test of universal application" which had recently been applied in other English Court and Tribunal decisions.
Generally speaking, this test considers the facts on a case by case basis. Here, Dr. Westwood was to provide exclusive advice and assistance to the Hospital for the provision of hair restoration; he was only to make himself available to the Hospital and no other facility (apart from the surgery); at no time could he avail his services to any competitor; he was required to obey all lawful directions of the Hospital; to notify the Hospital in the event of his sickness so that the Hospital may arrange the necessary cover and prevented from soliciting patients of the Hospital.
The Court placed particular emphasis on the fact that Dr. Westwood was recruited by the Hospital to perform services on its patients; he was therefore an "integral part of its operations". It was irrelevant that he was responsible for the payment of his own tax and/or national insurance contributions, or that he was required to take out his own professional indemnity insurance. The facts remains that "although he was not working for [the Hospital] pursuant to a contract of employment, he was clearly an integral part of its undertaking when providing services in respect of hair restoration, even though he was in business on his own account".
In light of this decision it is quite clear that factors such as responsibility for the payment of statutory deductions etc. are no longer the single key determining factors they once were. Many Channel Islands employers are no doubt entering into contracts for services on the assumption that its independent contractors can not be afforded the fundamental statutory protections under the relevant employment laws.
Well, employers take heed if you are responsible for recruiting self employed independent contractors, the facts may paint an altogether different picture. For now the confusion regarding employee status appears well and truly settled...until next time!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
