Dental Bulletin 48 – Dental associates; workers or self-employed? The tide is turning.
Since the Central London employment tribunal handed down its decision in the Uber case on 28th October 2016, the courts have been awash with claimants seeking to gain worker status. Pimlico Plumbers and CitySprint have both had judgments against them, and claims against Deliveroo, Amazon Logistics and Hermes are all in the pipe line.
But how is this relevant to the dental profession?
Whilst associates enjoy self-employed status for tax purposes, this is an arrangement with HMRC; not the legal system. Since the Uber case it is clear the courts are cracking down on false self-employment and so dental practices need to be live to this issue.
Failing to identify a person’s status from the outset will be a costly mistake to make.
Here we take a look at the recent judgments in the Pimlico Plumbers and CitySprint cases and explain what impact they have on worker status in the dental profession.
Definition of worker
What are the benefits of being classed as a worker? Workers have rights such as the national living wage, holiday pay, statutory sick pay and the right to pension auto enrolment, whilst still retaining the flexibility of a self-employed person.
The courts will ask three questions to determine if someone is a worker:
- Must the person personally provide the service or can they send a substitute?
- Is the company obliged to provide work and is the person obliged to accept it?
- Was the status of the “employer” under the contract that of a customer?
Over the years the dental profession has changed considerably. Increased regulation has meant that practices must have more control over how their associates work. Corporates seek to have a unified model of delivering dental services under a brand name. Practices more generally need to ensure they meet targets provided by NHS contracts.
The net result has been that associates have less control over their working practices, and have more obligations placed on them. This is likely to elevate them from self-employed into the category of worker.
Pimlico Plumbers – sending a substitute
At the very outset of the judgment the Court of Appeal stated, ‘The case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker’. A model that should sound familiar to most dentists.
The main focus of this appeal was the Tribunal’s finding that the plumber was obliged to perform the services personally.
The primary argument put forward by Pimlico Plumbers was that the plumber in question had a right to send a substitute and as such he was not engaged to perform the services personally. However, the Tribunal’s findings on this point was that the plumber could not send anyone he wished to do the job, he had to send another Pimlico Plumber. As such there was not an unfettered right to send a substitute at will, but instead the position was more akin to a shift swap.
The Court of Appeal recognised three types of relationship:
- Persons employed under a contract of service (worker);
- Persons who are self-employed, carrying on a profession or a business undertaking on their own accord;
- Persons who are self-employed and provide their services as part of someone else’s business or undertaking.
It is this last category that the plumber, and also dentists, would fit into.
The Court of Appeal went on to define the requirements of personal performance and set these out as follows:
- An unrestricted right to send a substitute to do the work is inconsistent with an undertaking to do the work personally. This is simple to determine and pretty obvious by all accounts;
- A conditional right to send a substitute may or may not mean there is personal performance; it will depend on the conditions placed on that right. In other words, it will depend on nature and degree of any fetter on the right. This was broken down further into:
- A right to send a substitute only when the contractor cannot perform the services suggests the contract is for personal performance;
- A right to substitution limited only to one who is suitably qualified, is inconsistent with personal performance;
- Where the right to substitution is dependent on the other party’s consent suggests the contract is for personal performance.
The Court of Appeal found that as the plumber could only send another Pimlico Plumber to undertake the work, this meant he had to perform the services personally and was therefore a worker.
In a dental practice the right to substitution is often limited to the circumstances set out in a. to c. above, meaning a court is likely to find that they are engaged to perform the services personally. However, it is important to bear in mind that this conclusion has not yet been tested by the Courts. Arguably the very nature of the provision of a medical service should be given special status on the basis that it is the patient’s needs, not the employers that must be taken into account. There are many circumstances where it would not be acceptable for a substitute to be sent, such as when a dentist is dealing with a patient with special needs.
CitySprint – controlling performance
In this case the courier had a contract that purported to be a self-employed contract. It had terms such as:
- The Contractor agrees and warrants that he is a self-employed contractor and is neither an employee or worker;
- The Contractor shall…provide the Services using reasonable case and skill and use his best endeavours to promote the best interests of CitySprint…the Contractor has discretion to determine the manner in which the services are performed at all times;
- The Contractor warrants and represents that he has read and understood the Information Booklet;
- The Contractor may at his own cost provide a substitute to perform any particular job. However, if that substitute is not a person or an entity who or which has itself already entered into a Tender Agreement with CitySprint the substitute shall be a person or entity this has the required insurance cover, knowledge, skills and ability.
Not too dissimilar from terms found in many associate contracts.
The courier accepted that if these terms were genuine then she would be self-employed. However, she asked the tribunal to look at the true relationship. It should be noted the courier had signed to confirm acceptance of the self-employed contract and had been registered as such for tax purposes.
It is well established that the Courts can look behind the contract to determine what the true relationship is between the parties. The Tribunal in this case re-iterated that the threshold for doing this is low; a firm reminder therefore that the terms of the contract should reflect the reality of the situation.
In this case the Tribunal held that there was sufficient evidence to show that the contract did not reflect the true relationship, and that the courier was in fact a worker for the following reasons:
- The Tribunal found that the courier did not have ‘discretion to determine the manner in which the services are performed at all times’. The courier had a one day training session where she was instructed on things like how to greet the customer and what to do if someone was not home. This showed an element of control by CitySprint as to how the service was to be provided.
Whilst clinical work will naturally be at the associate’s discretion; if a practice has strict polices in place in relation to how long each patient must be seen for, what documents must be completed for each patient visit, complaints procedures the associate must abide by or even compulsory training sessions and staff meetings, this could show an element of control.
- When looking at whether the courier had to provide the services personally, the Tribunal found that even though there was a right to send a substitute the reality was that the circumstances when she could were so small that she was in fact engaged to perform the services personally.
Associates very rarely send a substitute as patients expect to see their own dentist, and have often been recruited due to their specific skills. As stated in the judgment ‘the legal test is not whether there is a valid substitution clause but whether the claimant was contracted personally to carry out the work’.
- Finally, the tribunal found this was not a client/customer relationship; the courier was not in business on her own but part of the CitySprint business. They made this determination on the basis that the courier had to work when she said she would, when working they are directed as to what they will do, they have procedures to follow, and are part of the ‘family’ of couriers.
Dentists who have set hours, are told what patients they will see, follow practice procedures and are advertised on the dental practices website as part of the services the practice provides are likely to be deemed to be working as part of the practice not independently.
In issue 34 of our dental bulletin we set out how the Uber judgment would impact on associate contracts and these recent cases only strengthen our view that many associates legally will be defined as workers.
Of course, until an associate decides to test their status in court, the status quo is likely to remain as many associates enjoy tax benefits of being self-employed. That being said, it is perfectly possible that whilst an individual is deemed self-employed by HMRC, they are deemed to be a worker for the purpose of their employment status; an associate may well be able to have their cake and eat it. Employers need to consider this issue very carefully; failure to do so may result in a hefty bill to pay.
That is not to say you cannot retain the self-employed relationship between you and associates. With well drafted contracts tailored to your business you can ensure that you are protected. Remember; one size does not fit all.
If you need advice on the status of anyone in your workforce or need assistance with re-drafting contracts or documents to ensure associates are truly self-employed, please contact Laura Pearce on 0207 388 1658 or email her at firstname.lastname@example.org.
Laura Pearce, Senior Solicitor