By Hilary Larter, Ceri Fuller & Zoe Wigan

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Published 14 March 2023

Overview

In applying the Supreme Court’s decision in Uber BV and others v. Aslam and others the EAT has confirmed that written terms, including substitution clauses seeking to exclude an employment relationship, are not always irrelevant to a tribunal’s analysis of employment status. 

THE FACTS

Dr Ter-Berg was a dentist. He sold his dental practices and entered into an agreement to provide dental services to the purchaser. Under this agreement, he was to provide a certain number of units of dental activity every year. The agreement was stated to be personal to the parties and not capable of assignment. It stipulated that nothing in it constituted a partnership or a contract of employment. It also stated that, if Dr Ter-Berg failed to use the dental facilities for a continuous period of more than 20 days through “ill health or other cause”, he was required to  find a locum to provide services in his place (this is referred to in this alert as the “substitution clause”).  The locum would have to be acceptable to the purchasers and, if he did not find a locum, the purchasers had the authority to find one on his behalf.

Dr Ter-Berg claimed in the employment tribunal that he had been automatically unfairly dismissed for whistle-blowing. The employment tribunal had to decide whether he was an employee: if he were not an employee at the date of the alleged dismissal, he had no right to bring this claim.  

Dr Ter-Berg argued that, although he was initially engaged as an independent contractor, over time his employment status had changed, due to integration, control, and the requirement to provide services personally. The employment tribunal rejected these arguments, finding that none of the elements of an employment contract were present and that, in particular, there was no personal service and that the substitution clause was genuine. Dr Ter-Berg appealed to the EAT. 

Referring to the Uber case, Dr Ter-Berg argued that the employment tribunal should not have used the agreement as a starting point for determining whether he was an employee. However, the EAT rejected this argument, holding that the existing case law should not be interpreted to mean that written terms are, in every case, irrelevant or that they cannot ever accurately convey the true agreement of the parties. If the true intention of the parties is in dispute, it will be necessary to consider all the circumstances of the case: this may include the written terms. It would, however, be wrong to treat the written terms as the beginning and end of the enquiry.

The EAT did, however, hold that the employment tribunal had been wrong in its analysis of the substitution clause. The tribunal’s decision that the substitution clause was genuine had contributed to the conclusion that the personal service requirement of an employment contract was not satisfied, so Dr Ter-Berg was not an employee. The case was remitted to the employment tribunal for reconsideration.

WHAT DOES THIS MEAN FOR EMPLOYERS?

This case confirms that the more restrictive a substitution clause the more it will be scrutinised by an employment tribunal. The gateway to substitution in this case was “ill health or other cause” so the freedom to substitute was considerably fettered.

Recent case law has resulted in some confusion about the extent to which written terms should be taken into account when determining employment status.  This case provides useful clarification that the written terms can be taken into account as part of the wider factual consideration as to the genuine intention of the parties when creating a working relationship which might be an employment relationship.

Dr Mark Ter-Berg v Simply Smile Manor House Ltd & Ors [2023]

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