Dr Mark Ter-Berg v Parul Malde & Anor

The Employment Appeal Tribunal allowed the claimant's appeal against the tribunal's decision that he was not a worker under section 230(3) of the Employment Rights Act 1996. The EAT held that the tribunal erred in law in two main respects: (a) it was not bound to treat its earlier findings on employee status as automatically precluding a different conclusion on worker status; and (b) on a correct construction of clause 36 of the written Associate Agreement (a limited substitution clause) and on the facts found, the requirement of an obligation of personal service under section 230(3)(b) was satisfied.

The EAT followed and applied the authorities on personal service and substitution (notably Pimlico Plumbers) and Ready Mixed Concrete, and concluded there was no other clear factual feature negating personal service. Because the third limb of the worker test (that the putative engaging party is not a client or customer of any profession or business undertaking carried on by the individual) remained undecided by the tribunal, the EAT quashed the decision on worker status and remitted that issue for reconsideration.

Background and claims:

• The appellant is a dentist who sold his dental practice business to a company and entered an Associate Agreement (BDA form) with effect from 1 April 2013. He brought tribunal proceedings from November 2018 claiming unfair dismissal and detrimental treatment for making protected disclosures, alternatively alleging worker or employee status, and claiming holiday pay. The company and two director-respondents denied employee or worker status.

Procedural history:

• At an initial preliminary hearing Employment Judge Ord found the claimant was not an employee. HHJ Auerbach (in a first appeal, Ter-Berg 1) allowed one ground challenging the tribunal's construction of clause 36 (the substitution clause) and remitted. Employment Judge Palmer (Palmer 1, March 2023) concluded the claimant was not an employee. In a later reserved decision (Palmer 2, October 2023) EJ Palmer decided the claimant was not a worker. The company was later dissolved and removed as a respondent to this appeal.

Issues before the EAT:

• (i) Whether the tribunal erred in construing clause 36 and in concluding the claimant did not owe an obligation of personal service under section 230(3)(b) ERA 1996. (ii) Whether prior findings about employee status and mutuality of obligation / control were binding so as to preclude a finding of worker status. (iii) Whether the matter could be finally determined on the existing factual findings or should be remitted to the tribunal.

Court's reasoning and disposition:

• The EAT held that clause 36, properly read, is a limited substitution clause of the third type discussed in Pimlico Plumbers and, absent other clear contrary features, is consistent with an obligation of personal service. The tribunal in Palmer 2 erred in treating earlier findings about the parties' intention and control (relevant to employee status) as automatically decisive against worker status. The tribunal was wrong to treat the Ord/Palmer 1 findings as necessarily negating the personal-service element; on the facts found the personal-service requirement was satisfied.
• However, because the tribunal had not addressed the third limb of the worker definition (whether the company was a client or customer of any profession or business undertaking carried on by the claimant), that question remained open. The EAT quashed the tribunal’s decision on worker status and remitted the issue for a further hearing, directing that no new evidence be admitted but permitting written submissions.

Appeal allowed. The Employment Appeal Tribunal held that the tribunal erred in concluding that the claimant was not a worker: (1) the tribunal was not bound to treat earlier findings on employee status as automatically precluding worker status; and (2) on proper construction of clause 36 and the facts found the obligation of personal service required by section 230(3)(b) was satisfied. The matter was remitted to the employment tribunal to determine whether the company was a client or customer of any profession or business undertaking carried on by the claimant (the third limb of the worker test).