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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> The Hospital Medical Group Ltd v Westwood  EWCA Civ 1005 (24 July 2012)
Cite as:  ICR 415,  WLR(D) 222,  IRLR 834,  EWCA Civ 1005
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ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
JUDGE PETER CLARK
Strand, London, WC2A 2LL
B e f o r e :
Vice President of the Court of Appeal, Civil Division
LORD JUSTICE LONGMORE
LORD JUSTICE TOULSON
| THE HOSPITAL MEDICAL GROUP LTD
|- and -
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Simon Gorton QC (instructed by SAS Daniels LLP) for the Respondent
Hearing date : 10 July 2012
Crown Copyright ©
Lord Justice Maurice Kay :
"In this Act 'worker' (except in the phrases 'shopworker', and 'betting worker') means an individual who has entered into or works under (or, where the employment has ceased, worked under) –
(a) a contract of employment, or
(b) any other contract, whether expressed or implied and (if it is expressed) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;
and any reference to a worker's contract shall be construed accordingly."
The issue is whether Dr Colin Westwood, during the currency of his relationship with the Hospital Medical Group (HMG), was a worker. If he was, it is common ground that he is entitled to a substantial sum of money in respect of unlawful deductions and accrued holiday pay.
"4. The claimant Dr Colin Westwood is a general practitioner with a practice in Timperley, Cheshire. He has been a GP since 1977. He is the senior partner in a small surgery and has direct experience in employing staff and management of employment contracts and related documentation for this purpose. As is entirely normal he engaged accountants to prepare practice accounts and various expenses were claimed against practice income. He was responsible for payment of his own tax and National Insurance even though he asserts that as a GP he was in effect employed by the health authority. He has always had an interest in minor surgery and in the mid- 1990s he trained with a company called Transform and began performing minor operations for them in about 1997. During 2005 he was approached by the respondent and agreed to undertake procedures relating to hair restoration on their behalf. He was offered a role working on Saturdays only with a provisional start date of 1 July 2005. Following a slow start the claimant began to work regularly at the beginning of 2006.
5. The respondent is the Hospital Medical Group Limited. It has clinics based throughout the UK and Europe. Some of these clinics have facilities for cosmetic surgery procedures, and other clinics have facilities for consultation and non-surgical procedures. The respondent engages surgeons and doctors who have their own practices or businesses in their own right and none are engaged on contracts of employment. The respondent's business is based upon demand and the amount of procedures to be carried out on a monthly basis is not therefore fixed. If members of the public do not contract with the respondent to undertake certain procedures, then that work would not be available to be allocated to a particular surgeon or doctor.
6. When the claimant was initially engaged he signed a Practice Privileges Agreement which sets out some basic terms upon which he would provide his services to the respondent. In short it was an agreement under which the claimant who was referred to as 'the Consultant' agreed to utilise the facilities of the respondent, and to conduct professional practice and provide care for patients within the respondent's facility. The agreement was silent as to employment status and the method of payment. The parties subsequently entered a written contract of services on 1 April 2007, and this was superseded by a Surgeon's Contract for Training and Services dated 1 December 2007. This is the agreement which became effective, and which was in place when the relationship was ultimately terminated. [I refer to this as 'the Agreement'.]
7. When this new Agreement was sent to him in November 2007, the claimant took issue with some aspects of it and made these known to the respondent in a letter dated 20 November 2007. However, he raised no objection to any of the provisions of the contract relating to his status which was expressed to be as a self-employed independent contractor. He accepted the Agreement on this basis.
8. The Agreement is expressed to be a contract for services between the parties. The claimant is referred to in the Agreement as "the Surgeon". The Agreement was expressed to be for a fixed term of three years from 1 November 2007, but there were early termination provisions in clause 12 including the right to terminate without notice for any behaviour or conduct likely to have a serious adverse effect on the reputation of the respondent.
9. Clause 3 sets out the claimant's obligations under the Agreement. He was required to give such advice and assistance to the respondent in connection with the provision of hair restoration surgery as the respondent might request from time to time; to make himself available for any further instruction or discussion as may be necessary; to obey all lawful reasonable directions of the respondent; and not to provide his services within the UK to any competitor of the respondent.
10. Clause 4 required the claimant to raise invoices at the end of each calendar month in respect of the services provided. These were expressed to be exclusive of VAT if appropriate. The claimant was to be paid a fee calculated as a percentage rate of the procedures undertaken and the respondent had the right to amend the percentage rate on one month's notice. Under clause 13 the claimant was responsible for payment of his own expenses.
11. Under clause 5 the claimant agreed that he was an independent contractor and that he was liable for his own tortious acts and breaches of contract. He had to undertake to take out his own professional indemnity insurance. He was also required to carry out any post operative reviews and any remedial surgery at his own risk and without any additional fee being paid by the respondent.
12. Under clause 6 the claimant was required to notify the respondent if he was absent because of sickness. There were no provisions for payment during sickness but he was required to produce a doctor's certificate for each week of absence after more than seven days. There were no occasions upon which he did this. Apart from the absence of any sick pay, there were no provisions relating to holidays or holiday pay, and the claimant never claimed any. When the claimant wished to take holiday, he notified the respondent and the respondent arranged any necessary cove.
13. Clause 7 included restrictive covenants, preventing the claimant from providing services to any competitor of the respondent during the continuance of the Agreement, and also against soliciting patients of the respondent for the period of 12 months after termination of the Agreement. Clause 8 contained confidentiality provisions.
14. Under clause 9 the claimant was required to pay all tax and national insurance as a self-employed person and agreed to indemnify the respondent in respect of any claims or demands which might be made by the authorities. Under clause 10 the claimant gave a warranty and a representation that he was an independent contractor and agreed that he was to bear sole responsibility for payment of tax and National Insurance contributions.
15. For many years from 2006 the relationship worked well between the parties. The claimant was habitually available towards the end of each week. For instance, from the beginning of January 2010 until August 2010 the claimant attended on average on at least two sessions per week. However, he was not obliged to work at a set time or for a set number of hours. He was able if he wished not to accept any assignments given to him by the respondent. He told us that he thought that the respondent would 'not be very happy' if he refused to carry out procedures which had been booked in for patients. Nonetheless he had the option to decline to undertake procedures if he chose not to attend, or if he felt for medical reasons that the arrangements made should not proceed. The fact that the arrangements suited both parties, and as a matter of fact did take place on average about twice a week, should not be confused with the finding that there was a requirement that the claimant had to complete the procedures, or that the respondent was required to provide work. I find that there was no mutual obligation that the respondent had to provide patients to be operated on, nor that the claimant necessarily had to undertake those arrangements. In short there was no mutuality of obligation. In addition the respondent did not have direct control over the claimant in the way in which he treated the patients. The responsibility for safe medical practices remained throughout with the claimant.
16. Eventually, the Agreement was terminated summarily by e-mail dated 19 August 2010. The reason given related to concerns about the claimant's ability to carry out his professional services properly. The e-mail from Mrs Carter of the respondent stated 'our conclusion was reached as clinicians have expressed some concerns'.
17. Throughout this time the claimant carried on his main profession as a GP. He engaged a locum to cover his GP responsibilities whilst working for the respondent. He did not submit formal invoices to the respondent as such, but did submit handwritten claim forms in respect of each session. He was paid the agreed percentage rate as against these claims. He stamped these with his professional address namely the Timperley Health Centre. He also corresponded with the respondent and with patients from this practice address. His own business card referred to him as a hair restoration surgeon with his practice details on the reverse of the card. The relevant e-mail correspondence was submitted through his NHS e-mail address. He did not use any of the respondent's stationery, address or contact details. He also paid his own expenses as required by the Agreement, and arranged and paid for his own professional indemnity insurance.
18. During this time the claimant also worked for an entirely separate independent medical organisation known as the Albany Clinic. He gave advice on transgender issues."
The decision of the ET
"30. … I find that it is clear that the claimant was engaged by the respondent as a self-employed independent contractor. I have no hesitation in rejecting the assertion that he was employed under a contract of service. There was no mutuality of obligation, and no direct control of the claimant by the respondent. The claimant was clearly in business on his own account and was engaged under a contract for services as a self-employed independent contractor. This was his preferred status throughout and only changed when he wished to challenge the termination of the Agreement.
31. … I find that it is equally clear that the claimant was engaged personally to carry out the work himself. This has been conceded by the respondent in these proceedings. The claimant had no right to delegate, and the respondent wished to engage the claimant because he personally had the skills required to treat patients introduced by the respondent.
32. … I find that the claimant's work was not done with the respondent in the capacity of client or customer of the claimant. The patients treated were the clients or customers of the respondent, and the claimant was paid a percentage of the agreed rate which the client or customer of the respondent paid to the respondent. The claimant was an independent contractor in his own right, engaged by the respondent who in effect introduced their patients to him, and the respondent was not a client or customer of the claimant. Accordingly I find that the claimant was a worker under 'limb b' of section 230 of the Act, and that this Tribunal does have jurisdiction to hear his claims relating to unlawful deduction from wages and for accrued holiday pay."
The decision of the Employment Appeal Tribunal
"16. … It is absolutely clear to me that Dr Westwood was not, by virtue of the Agreement, performing work or services for the respondent as a client or customer of any profession or business carried on by him.
17. Under the Agreement the claimant agreed to provide his services as a Hair Restoration Surgeon, exclusively to the respondent (see clause 7). He did not offer that service to the world in general. He was recruited by the respondent to work for it as an integral part of its operations. The respondent introduced the patients who the claimant saw and treated at the respondent's Birmingham premises, using their equipment. That work was wholly separate from his work as a General Practitioner at his surgery in Cheshire. It had nothing to do with his work giving advice on transgender issues at the Albany clinic … In short, it is plain that he did not fall on the 'limb b' exception side of the line."
The proceedings in this Court
Grounds of appeal
- Whether a person is engaged in business on his own account is a question of fact for the ET. It unequivocally found that Dr Westwood was so engaged.
- Dr Westwood dealt with HMG in the course of that business.
- HMG was therefore Dr Westwood's "client or customer" in his profession or business.
- The ET was wrong to hold otherwise and in particular, was wrong to treat the status exception in section 230(3)(b) as a separate or additional hurdle.
Mr Green further submits that his approach provides a more certain and predictable framework for the determination of borderline cases.
"75. There are three requirements. Two are positive and one is negative. First, the worker has to be an individual who has entered into or works under a contract with another party for work or services …
76. The second requirement of the statutory definition in paragraph (b) of s.230(3) is that the individual undertakes to do or perform personally the work or services for the other party …
77. The third requirement relates to the status of the other party to the contract. That other party must not, by virtue of the contract, have the status of a client or customer of any profession or business undertaking carried on by the individual who is to perform the work or services … in most cases at least, it is easy enough to recognise someone who has this status. It includes, for example, the solicitor's or accountant's client or a customer who seeks and obtains services of a business undertaking such as from an insurance broker or pensions adviser."
I consider this to be a helpful formulation and I am content to adopt it. In the present case, there is no issue about the first and second requirements. The identification of the third requirement as such places an obstacle in the way of Mr Green's submission that the status exception should not have been treated as a separate hurdle in this case.
"Prima facie, when someone purchases services from another, in common parlance, he can be regarded as a customer of the other. The terms 'customer' and 'client' in section 54 of the Act are not used as terms of art. In our opinion, ECCS is a customer or client of the stewards, as it receives the benefit of the service provided by the stewards' business, and is described as such in the Stewards' Agreement. They provided … the stewarding and catering services to ECCS, which ECCS was itself bound to supply to Durham Transport Services. On that analysis, as it seems to us and having regard to the fact that the major part of the contract, both in terms of time and in terms of remuneration related to the catering, and having regard to the fact that the stewards were performing, personally, catering services for ECCS pursuant to a business undertaking carried on by the stewards, that ECCS was a client or customer of that business undertaking. As such, it seems to us on the material findings, the Tribunal should have held that the stewards were not workers within the meaning of section 54 (3)(b) of the Act, by reason of the fact that they were outside section 54(3)(b). They were carrying on … a business undertaking for reward for ECCS, and were clients or customers of ECCS."
"… it seems plain that a focus upon whether the purported worker actively markets his services as an independent person to the world in general (a person who will thus have a client or customer) on the one hand, or whether he is recruited by the principal to work for that principal as an integral part of the principal's operations, will in most cases demonstrate on which side of the line a given person falls."
Thus, he was emphasising indicative factors such as marketing services as an independent person to the world in general and, on the other hand integration in the business of the other party to the contract. These were advanced specifically as indications rather than principles of universal application.
Lord Justice Longmore:
Lord Justice Toulson: