The Hospital Medical Group Ltd v Westwood

An individual may be a worker under section 230(3)(b) of the Employment Rights Act 1996 despite carrying on business on their own account. The statute imposes three requirements: a contract for work or services, an undertaking of personal performance, and the absence of client or customer status in the other contracting party.

The particular contract is the starting point. Integration into the principal’s operations and whether the individual markets the relevant services independently may indicate the relationship’s character. These are useful analytical tools rather than universal tests. A tribunal must apply the statutory language to the particular facts and must not treat self-employment as automatically establishing the client or customer exception.

A general practitioner contracted with the appellant company to perform hair-restoration surgery personally and exclusively. The contract described him as a self-employed independent contractor. He nevertheless worked as an integral part of the company’s hair-restoration operations and treated patients introduced by it.

The Employment Tribunal found that he was not an employee but was a worker under section 230(3)(b) of the Employment Rights Act 1996. It therefore had jurisdiction over his claims for unlawful deductions and accrued holiday pay. The Employment Appeal Tribunal upheld that conclusion as plainly correct.

The company appealed. The central issue was whether conducting a business on his own account necessarily meant that the company was his client or customer, thereby excluding him from worker status.

1. Appeal dismissed unanimously. The Employment Tribunal and Employment Appeal Tribunal correctly concluded that the respondent was a worker under section 230(3)(b) of the Employment Rights Act 1996. Maurice Kay LJ gave the judgment, with which Longmore and Toulson LJJ agreed.

2. Section 230(3)(b) contains three requirements. The individual must work under a contract for work or services, must undertake personal performance, and must contract with a party whose status under that contract is not that of a client or customer of the individual’s profession or business. The analysis of Aikens LJ in Autoclenz Ltd v Belcher [2010] 1RLR 70, although obiter on limb (b), was helpful and was adopted.

3. A finding that an individual conducts business on their own account does not determine whether the other party is a client or customer. Parliament enacted a more nuanced exception. Treating self-employment as conclusive would deprive the client or customer words of independent effect. The third requirement is a separate negative hurdle.

4. The starting point is the particular contract because the statutory exception expressly concerns status arising by virtue of that contract. The respondent’s general practice, transgender work and hair-restoration work were distinct outlets for his professional skills. Under the relevant contract, he performed hair-restoration surgery specifically and exclusively for the appellant, was presented as one of its surgeons and formed an integral part of its undertaking. The appellant was therefore not his client or customer.

5. No single supplementary test resolves every case. Whether an individual markets the relevant services independently to the world or is recruited as an integral part of the principal’s operations will often be helpful. The integration approach from Cotswold Developments Construction Ltd v Williams was appropriate here. Other tools, including the dominant-purpose approach discussed in James v Redcats (Brands) Limited [2007] ICR 1006, may assist in other factual settings. Such tools remain indications and must not gloss the statutory language.

1. Court of Appeal (Civil Division): The company’s appeal was dismissed unanimously. The finding that the respondent was a worker under section 230(3)(b) of the Employment Rights Act 1996 was upheld.

2. Employment Appeal Tribunal: Judge Peter Clark dismissed the company’s appeal, holding that the Employment Tribunal’s conclusion was plainly and unarguably correct.

3. Employment Tribunal: The Tribunal held that the respondent was not an employee but was a limb (b) worker. It therefore had jurisdiction over his claims for unlawful deductions and accrued holiday pay.