Sejpal v Rodericks Dental Limited

The Employment Appeal Tribunal held that the Employment Tribunal had applied the statutory tests in an unsound way when determining whether the claimant was a "worker" under section 230(3)(b) Employment Rights Act 1996 and an "employee" for the purposes of section 83(2) Equality Act 2010. The EAT set out the correct structured approach: (i) there must be a contract or similar agreement between the parties and (ii) the individual must have agreed to perform work or services personally, subject to the statutory exclusion where the individual carries on a profession or business and the other party is a client or customer of that business.

The EAT found material errors of law in the tribunal's treatment of mutuality of obligation, the proper approach to the written terms (including over-reliance on contractual labels and a requirement that a written term be a "sham" before it could be displaced), and the analysis of substitution and personal service. Applying the correct approach, the EAT concluded that there was a contract and that the claimant agreed to provide some personal service. However, the questions whether the claimant carried on a profession or business undertaking and whether the respondent was her client or customer were not resolved and were remitted to a freshly constituted Employment Tribunal.

This is an appeal from a preliminary hearing in which the Employment Tribunal had held that Mrs Sejpal, a dentist working as an "Associate" under a 2013 Associateship Contract, was not a "worker" under section 230(3)(b) ERA nor an "employee" for the purposes of section 83(2) EQA. The claimant alleged discrimination because of pregnancy or maternity and other employment-related claims which depended on worker status.

Procedural history: The preliminary hearing took place on 10 and 11 December 2019 with oral submissions on 5 February 2020; the Employment Tribunal judgment was sent to the parties on 24 November 2020. The decision under appeal is that judgment.

Nature of the application and relief sought:

• The claimant sought a determination that she was a worker (and thus entitled to statutory protections) and proceeded with discrimination and other claims dependent on that status. The Employment Tribunal dismissed her claims for lack of worker/employee status; the appellant appealed.

Issues framed:

• Whether the Employment Tribunal had correctly applied the statutory tests in section 230(3)(b) ERA and section 83(2) EQA to determine worker/employee status;
• Whether there was a contract and sufficient mutuality of obligation;
• Whether the claimant was obliged to provide personal service or whether an unfettered right of substitution precluded personal performance;
• Whether the claimant carried on a profession or business undertaking and, if so, whether the respondent was a client or customer under the statutory exclusion;
• Related issues of contractual construction, control and integration.

Court’s reasoning and outcome on issues:

• The EAT emphasised that the correct approach is statutory and purposive: determine whether there is a contract (or comparable agreement) and whether the individual undertook to perform services personally, bearing in mind the statutory exclusion for those in business on their own account whose client is the contracting party.
• The Employment Tribunal had erred by over-relying on the written contract's labels and treating the contract as decisive unless shown to be a "sham"; the EAT said the true agreement must be ascertained in the light of the statutory purpose and relevant authorities (for example Autoclenz, Bates van Winkelhof, Pimlico Plumbers, Uber and others cited in the judgment).
• The Employment Tribunal also erred in concluding lack of mutuality of obligation: there was a single Associateship Contract and no realistic dispute about a contract's existence.
• On substitution, the EAT held that the locum clause did not establish an unfettered right of substitution: the clause activated only after a 14-day absence, required regulatory compliance and acceptability to the respondent, and was therefore consistent with at least some personal performance; on the tribunal's findings the predominant purpose of the contract required personal service.
• Because the Employment Tribunal had not addressed whether the claimant carried on a profession or business undertaking and whether the respondent was a client or customer pursuant to that contract, those issues were remitted to a different Employment Tribunal for fresh determination.

The EAT therefore substituted a determination that the claimant had entered into and worked under a contract whereby she agreed to provide some personal services, allowed the appeal in part, and remitted the remaining factual and legal questions to be decided afresh by another tribunal.

The appeal was allowed in part. The EAT held that the Employment Tribunal had erred in law by (i) wrongly treating the written contract's labels and wording as decisive unless it was a "sham", (ii) misapplying mutuality of obligation principles, and (iii) incorrectly concluding there was an unfettered right of substitution negating any personal service. The EAT substituted findings that there was a contract and that the claimant agreed to provide some personal service, but remitted the remaining issues — whether the claimant carried on a profession or business undertaking and whether the respondent was a client or customer — to a differently constituted Employment Tribunal for fresh determination.

Appeal to the Employment Appeal Tribunal from the Employment Tribunal judgment of Employment Judge Professor A C Neal following a preliminary hearing on 10–11 December 2019 (oral submissions 5 February 2020); ET judgment sent to parties 24 November 2020. This judgment is the EAT determination [2022] EAT 91.