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
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
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 1 January 2017 the Financial Services Rule Book 2016 comes into operation. With this will be the requirement on all Isle of Man licence holders to establish, implement and maintain an effective whistleblowing policy.
The Ministry of Human Resources has recently issued a string of new ministerial resolutions and decrees designed to address gaps in the employment regulatory framework and reinforce existing legislation...
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