Do independent contractors have worker status?
The Court of Appeal held that a doctor who provided services to customers of a clinic was a ‘worker’ and accordingly could bring claims for unlawful deductions from wages and for unpaid holiday pay.
The Claimant, Dr Westwood, was a general practitioner with his own practice. In 2005 he began carrying out minor hair restoration operations for the Hospital Medical Group (the "Company"). No contract of employment was signed and the Claimant worked for the Company only when his services were required. The agreement in force between the Claimant and the Company at the time the claim was brought stated that the Claimant’s status was that of a self-employed contractor.
In 2010 the Company summarily terminated the agreement and the Claimant brought claims for unfair dismissal, breach of contract, unlawful deduction of wages and for accrued holiday pay.
The Employment Tribunal held that the Claimant was not an employee of the Company and therefore the Claimant’s claims for unfair dismissal and breach of contract were rejected by the Tribunal. However, the Tribunal held that the Claimant was a 'worker' entitling him to bring claims for unlawful deductions from wages and accrued holiday pay.
The Company appealed unsuccessfully to the Employment Appeal Tribunal. The Company then appealed to the Court of Appeal. The Court of Appeal agreed with the Employment Tribunal that the Claimant was a worker and rejected the appeal. In arriving at this decision, the Court of Appeal considered a number of factors, including whether the Claimant was an integral part of the Company’s business.
This case demonstrates that it is important for employers to be able to determine accurately the status of the individuals who perform work for them. It is not enough to only include a clause in a contract or agreement which states that the individual is a self-employed contractor as the courts will look beyond such an agreement at the reality of the situation. In this case Dr Westwood was considered by the Tribunal to be an integral part of the business, despite being in business on his own account, because:
- (i) he agreed to provide his hair restoration surgery services exclusively to the Company;
- (ii) he did not offer his hair restoration services "to the world in general"; and
- (iii) he was recruited by the Company "to work for it as an integral part of its operations".