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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Mitchell & Anor v Revenue & Customs [2011] UKFTT 172 (TC) (15 March 2011) URL: https://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01041.html Cite as: [2011] UKFTT 172 (TC) |
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Appeal number: TC/2010/01564
Employment income -- whether surgeon assisting consultant cardiac surgeon during operations was an employee or self-employed -- appeal allowed
FIRST-TIER TRIBUNAL
TAX
IAN
MITCHELL
FRCS Appellant
- and -
- and -
DR PRABHAKER BHIMAGUNTA Third Party
TRIBUNAL: JUDGE GUY BRANNAN
MARYVONNE HANDS
Sitting in public at Byron
House, Nottingham on 11 January 2011
The Appellant appeared in person
Mrs K Walker for the Respondents
© CROWN COPYRIGHT
2011
DECISION
1. Mr
Mitchell
is a consultant cardiac surgeon. He appeals against a decision and
determinations for the purposes of, respectively, national insurance
contributions ("NICs") and PAYE that Dr Bhimagunta -- who assists Mr
Mitchell
in operations on Mr
Mitchell's
private patients -- is Mr
Mitchell's
employee (or employed earner for NIC purposes).
2005 – 2006 £1800.00
2006 – 2007 £600.00
5. We
heard evidence from Mr Mitchell
and Dr Bhimagunta. In addition,
HMRC
produced a
bundle of documents which included, inter-alia, correspondence and notes of
meetings.
" Categories of earners
(1) In this
Part of this Act and Parts II to V
below—
(a) “employed earner” means a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with general earnings; and
(b) “self-employed earner” means a person who is gainfully employed in Great Britain otherwise than in employed earner's employment (whether or not he is also employed in such employment)."
"(1) Where earnings are paid to an employed earner and in respect of that payment liability arises for primary and secondary Class 1 contributions, the secondary contributor shall (except in prescribed circumstances), as well as being liable for any secondary contribution of his own, be liable in the first instance to pay also the earner's primary contribution or a prescribed part of the earner's primary contribution, on behalf of and to the exclusion of the earner; and for the purposes of this Act and the Administration Act contributions paid by the secondary contributor on behalf of the earner shall be taken to be contributions paid by the earner.
(2) . . .
(3) A secondary contributor shall be entitled, subject to and in accordance with regulations, to recover from an earner the amount of any primary Class 1 contribution paid or to be paid by him on behalf of the earner; and, subject to sub-paragraphs (3A) to (5) below but notwithstanding any other provision in any enactment], regulations under this sub-paragraph shall provide for recovery to be made by deduction from the earner's earnings, and for it not to be made in any other way."
8. Section 8 Social Security Contributions (Transfer of Functions, Etc) Act 1999 provides:
"Decisions by officers of Board
(1) Subject to the provisions of this Part, it shall be for an officer of the Board—
(a) to
decide whether for the purposes of Parts I to V of
the Social Security Contributions and Benefits Act 1992 a person is or was an
earner and, if so, the category of earners in which he is or was to be
included,
(b) ….
(c) to decide whether a person is or was liable to pay contributions of any particular class and, if so, the amount that he is or was liable to pay,"
10. As regards PAYE, section 684 Income Tax (Earnings and Pensions) Act
2003 ("ITEPA") requires HMRC
to make regulations in respect of PAYE.
The Income Tax (Pay As You Earn) Regulations 2003 SI 2003/2682 ("the PAYE
Regulations") require an employer to deduct an account for PAYE when
making payments of employment income to an employee. Regulation 80 of the PAYE
Regulations provides:
Determination of unpaid tax and appeal against determination
(1) This
regulation applies if it appears to [HMRC]
that there may be tax payable for a
tax year under regulation 68 by an employer which has neither been—
(a) paid to
[HMRC],
nor
(b)
certified by [HMRC]
under regulation 76, 77, 78 or 79.
(2) [HMRC]
may determine the amount of that tax to the best of their judgment, and serve
notice of their determination on the employer.
(3) A determination under this regulation must not include tax in respect of which a direction under regulation 72(5) has been made; and directions under that regulation do not apply to tax determined under this regulation.
(4) A determination under this regulation may—
(a) cover the tax payable by the employer under regulation 68 for any one or more tax periods in a tax year, and
(b) extend to the whole of that tax, or to such part of it as is payable in respect of—
(i) a class or classes of employees specified in the notice of determination (without naming the individual employees), or
(ii) one or more named employees specified in the notice.
(5) A determination under this regulation is subject to Parts 4, 5 . . .and 6 of TMA (assessment, appeals, collection and recovery) as if—
(a) the determination were an assessment, and
(b) the amount of tax determined were income tax charged on the employer,
and those Parts of that Act apply accordingly with any necessary modifications.
(6) . . .
[references to "HMRC"
were added in 2008 and have been included for ease of reference]
12. We find the following facts.
13. Mr Mitchell
is a Fellow of the Royal College of Surgeons. He is a
cardiac surgeon and is employed by a National Health Service Trust ("NHS")
in Nottingham. As well as his NHS practice, Mr
Mitchell
also has a private
practice. Where surgery is required by Mr
Mitchell's
private patients he
performs operations at two available hospitals in Nottingham, principally at
the Park Hospital (and
very
occasionally at the City Hospital).
14. Patients come to Mr Mitchell
either by being referred by
cardiologists or by a patient being seen by Mr
Mitchell
in his NHS clinic and
that patient then indicating that they would prefer to have the operation
performed privately.
15. Once it was
agreed with the patient that an operation should be undertaken privately, Mr
Mitchell
would set about making the necessary arrangements. He
would liaise with the Park Hospital and would book an operating theatre for a
convenient day. The date was dependent on the availability of the patient, Mr
Mitchell
and, most importantly, the operating theatre itself. Mr
Mitchell
explained that because cardiac surgery on private patients was not a regular
occurrence (he contrasted this with orthopaedic surgery
where an orthopaedic surgeon would often have a "block booking" for
an operating theatre) theatre availability was often the main factor in
determining the date of operation. Mr
Mitchell
indicated that the City Hospital did not always seem to like making itself available for private operations and,
therefore, he usually would contact the Park Hospital.
16. Mr Mitchell
would then put together the medical team for the
operation. Mr
Mitchell
would usually ask Dr Bhimagunta to assist him.
17. Dr Bhimagunta (until 2010) was employed as a registrar by the same
NHS Trust as Mr Mitchell.
He worked closely with Mr
Mitchell
in his NHS
practice and assisted Mr
Mitchell
on cardiac operations performed within the
NHS. Mr
Mitchell
had been working with Dr Bhimagunta since 2005. At some time
in 2010 Dr Bhimagunta commenced a different role within the NHS and since that
time Mr
Mitchell
has used
another
assistant in his private operations.
18. In addition to Dr Bhimagunta, Mr Mitchell
would arrange for an
anaesthetist, with whom he had worked before, to assist in the operation. The
anaesthetist would bill the patient (or more often the insurance company)
directly.
19. Mr Mitchell
would also arrange the services of a perfusionist or
possibly two perfusionists to assist with the operation. A perfusionist is a
highly skilled operator of the machine that artificially circulates the
patient's blood during the operation. Usually, the patient's heart is stopped
during the operation and the perfusionist ensures a continuation of the blood
supply. The perfusionist would be supplied and paid by the Park Hospital.
20. The nursing staff were provided and paid by the Park Hospital.
21. It was clear from the evidence that Mr Mitchell
took great care in
assembling his surgical team. For reasons explained in greater detail below, he
made sure that the team was made up of individuals with whom he had worked
before and with whose work he felt comfortable.
22. The surgical instruments and necessary equipment (including stitches
and prosthetic valves)
were also provided by the Park Hospital. Mr
Mitchell
and
Dr Bhimagunta provided no equipment of their own apart from their surgical
goggles and, as Mr
Mitchell
put it, their hands.
23. The patient (in practice, more usually, the patient's insurance
company) would receive three bills for the operation: one from Mr Mitchell,
one
from the anaesthetist and one from the Park Hospital.
24. There was usually no written contract between the patient and Mr
Mitchell
(or indeed with any other member of the medical team), although the
patient would be asked to sign a consent form.
25. The arrangement between Dr Mitchell
and Dr Bhimagunta was that Mr
Mitchell
agreed to pay Dr Bhimagunta a fixed fee for each operation. The fee
was usually approximately £120 – 150, regardless of the length or complexity of
the operation. The fee would be paid by Mr
Mitchell
when he was paid by the
patient or the patient’s insurance company. Mr
Mitchell
was paid by insurance
companies according to fixed scale fees which were determined by the nature of
the operation and took no account how long any operation actually took. Mr
Mitchell
had never failed to pay Dr Bhimagunta. There were, however, occasions
(e.g. when the operation was cancelled, sometimes on the day of the operation
itself e.g. because the patient had developed an infection) when Dr Bhimagunta
would not be paid, even though he had turned up at the hospital.
26. Dr Bhimagunta was not involved in the post-operative care of Mr
Mitchell's
patients. There were occasions, however, where further surgical
attention was required (e.g. where the patient was bleeding heavily after an
operation). Dr Bhimagunta would, although he had no obligation to do so, assist
Mr
Mitchell
in a further surgical procedure in theatre in these cases, when Mr
Mitchell
considered it would be unsafe for him to carry out the procedure
without assistance. Dr Bhimagunta would not receive any further payment for
this further surgical procedure.
27. In arranging the operation, Mr Mitchell
would, as indicated, ask Dr
Bhimagunta if he was available. If he was not available (e.g. when he was on
holiday) Mr
Mitchell
would either ask
another
doctor to assist or,
occasionally, rearrange the date of the operation. Mr
Mitchell
made it clear
that he would not accept a substitute nominated by Dr Bhimagunta unless it was
a registrar whom he knew well. Dr Bhimagunta accepted that he had never put
forward a substitute.
28. Mr Mitchell
preferred to operate with Dr Bhimagunta. They knew each
other well and worked closely together in the NHS. Mr
Mitchell
liked his
particular method of working, with which Mr
Mitchell
was comfortable. Mr
Mitchell
likened his role in an operation, in relation to the other members of
the medical team, to that of a conductor of an orchestra. He had overall
responsibility for the operation and to ensure that each member of the team was
doing their allotted task at the necessary time. He had overall control of the
operation, where necessary telling members of the medical team when to do
things and what drugs to use. Subject to that, he allowed each highly skilled
member of the team to get on with their specific tasks. It was necessary to
have one person in overall control in the operating theatre but he considered
he had the same degree of control over the anesthetist, the perfusionist, and
the scrub nurses as he did over Dr Bhimagunta.
29. One of the reasons why Mr Mitchell
liked to have Dr Bhimagunta as
his assistant was because they operated together so frequently so that Dr
Bhimagunta knew exactly what needed to be done without having to be asked and
each new the other's working methods. Mr
Mitchell
said that sometimes
operations, which could last several hours, would pass in almost complete
silence as each highly skilled and specialised member of the medical team went
about their specific duties with
very
little need of guidance or instruction
from him.
30. Sometimes, Mr Mitchell
would ask Dr Bhimagunta to perform a specific
task, such as the removal of a
vein
in the patient's leg, but Dr Bhimagunta
would carry out the task without Mr
Mitchell's
further involvement. In any
event, Mr
Mitchell
would usually be fully engaged -- literally having his hands
full, as he put it, inside the patient's chest -- in performing the necessary
surgical procedures on the patient's heart.
31. Dr Bhimagunta agreed that he and Mr Mitchell
knew each other well.
When an operation was to be performed, after scrubbing up, Mr
Mitchell
would
concentrate on the patient's chest and Dr Bhimagunta would, for example, remove
a
vein.
Each member of the team would know what they were doing. Usually before
an operation the members of the team would discuss what needed to be done. This
would depend on the type of operation be undertaken. For example, if a
valve
replacement was being performed, Dr Bhimagunta would know exactly what needed
to be done in his role as an assistant. Mr
Mitchell
did not need to give him
instructions (for example, he would not need to say "retract this").
There were often many steps in an operation -- the procedures could be
very
complex -- but Mr
Mitchell
would always do them the same way.
32. Mr Mitchell
valued
Dr Bhimagunta’s skill, experience and their
close, almost intuitive, working relationship. He was strongly of the opinion
(which we accept), in the circumstances of cardiac surgery, that such a
relationship was
very
much in the interests of the patient and the patient's
safety. Mr
Mitchell
noted that 2-3 % of patients who underwent major cardiac
surgery would die. In his
view,
patient safety was paramount. That was why he
preferred to operate with Dr Bhimagunta. It would have been possible, as he put
it, to assemble a random team consisting of anesthetists, perfusionists and an
assistant surgeon whom he did not know but he considered this would be unsafe
for the patient.
33. Dr Bhimagunta was free to work on private operations with other
consultants. In practice, because he was not popular with other consultants, he
was used for private work only by Mr Mitchell.
35. The number of private operations performed by Mr Mitchell
varied
greatly. Mr
Mitchell
estimated that he performed approximately 20 private
operations each year (although we note that in 2005/2006 and in 2006/2007 Mr
Mitchell
paid Dr Bhimagunta £4500 and £1500 respectively); although more
recently he had performed significantly fewer private operations. The frequency
of the operations was
very
sporadic. Sometimes, he could perform a number of
operations within a few weeks and then perform no private operations for
several months.
36. A contract was entered into between Mr Mitchell
and Dr Bhimagunta on
1 February 2005. It is headed "Self-Employed Contract for Services".
The contract, so far as is material, provides as follows:
"The Sub Contractor [Dr
Bhimagunta] is in business on his/her own account as an independent surgical
assistant and has skills and abilities that can offer services which may be of
use to the Contractor [Mr Mitchell]
from time to time.
The Contractor and the Sub Contractor agree and intends where the Sub Contractor agrees to provide services to the Contractor he/she will do so in accordance with the Operative Provisions of the Contract for Service.
CONTRACT FOR SERVICES
1. This Contract for Services shall commence on 1 February 2005.
2. The Sub Contractor agrees to provide surgical assistant Services to the Contractor (the "Works").
3. The Sub Contractor agrees to provide the Services in a professional and workmanlike manner at all times.
4. The Sub Contractor shall assist the Contractor by making all reasonable attempts to work within an agreed deadline and will observe Health and Safety regulations as appropriate.
5. The Sub Contractor May at his/her discretion may send a substitute or delegate to perform the Works. Where this occurs, the Contractor shall have no contractual or financial relationship with the substitute or delegate.
6. The Contractor and the Sub
Contractor shall verbally
agree a fixed fee per item of service, payable on
completion of each separate task.
7. The Contractor and Sub Contractor agree and intend that the period of time covered by each completed task shall represent the commencement and termination of an individual Contract for Services and that a new Contract for Services commences on the next day contract works are undertaken. All clauses of this Contract for Services will be operative during any such individual contract, but specifically both Parties agree that no an umbrella or composite contract is being entered into.
8. The Contractor and Sub Contractor agree and intend that each gross payment represents an individual Contract for Services and that a new Contract for Services commences on the next day contract works are undertaken. All clauses of this Contract for Services will be operative during any such individual contract, but specifically both Parties agree that no an umbrella or composite contract is being entered into.
FINANCIAL RISK
9. The Sub Contractor will negotiate the price for the Works and is obliged to honour any agreed price.
10. The Sub Contractor shall not be entitled to receive the sick pay, holiday pay or Bank holiday pay in any circumstances. The Sub Contractor agrees he/she is not entitled to any employment rights which may be available to direct employees.
11. The Sub Contractor will not be entitled to receive payment for cancelled Works.
12. This Contract for Services can be immediately terminated by either party for whatever reason and no notice is required to be given. The Sub Contractor is not entitled to partake in any grievance procedure against the Contractor.
13. The Contractor is not obliged to offer ongoing contracts for Works to the Sub Contractor nor is the Sub Contractor obliged to accept such contracts or Works if offered. The Sub Contractor is not obliged to make his/her services available. Specifically, both parties accept that they do not wish to create or imply any mutuality of obligations whatsoever, at any time, either during or in between any individual Contract for Services.
14. The Sub Contractor agrees to accept responsibility for liability insurance in respect of the Works.
15. The Sub Contractor is not entitled to any pension benefits or partake in any pension run by the Contractor. Personal pension provision May be made by the Sub Contractor at his/her own discretion.
FREEDOM OF THE SUB CONTRACTOR TO UNDERTAKE OTHER WORKS
16. The Sub Contractor is free to undertake other Contracts for Services for other parties at any time, either before, after or concurrently with this Contract for Services.
17. The Contractor acknowledges and
agrees that he does not have first call on the services of the Sub Contractor
and cannot require the Sub Contractor to give him, the Contractor, any priority
over another
Contractor.
TAXATION AND NATIONAL INSURANCE
18. The Sub Contractor agrees that as an independent person in business on his/her own account, he/she is responsible for his/her own tax and national insurance.
BUSINESS ORGANISATION
19. The Sub Contractor will at all times represent him/herself as an independent Sub Contractor and will in no circumstances represent him/herself or hold him/herself out as a servant or employee of the Contractor. The Sub Contractor hereby acknowledges the/she is in business on his/her own account and is not part and parcel of the Contractor's business.
INTENTION OF THE PARTIES
20. Both parties agree and intend that the legal relationship is one of an independent Sub Contractor and specifically is not a relationship of master and servant or employer and employee."
37. Although paragraph 5 of the contract allowed Dr Bhimagunta to send a
substitute, in practice, Mr Mitchell
made it clear that he would not accept a
substitute unless it was the registrar whom he knew well.
38. In accordance with the contract, Dr Bhimagunta was not entitled to
sick pay, travel expenses or paid holiday. There was no commitment by Mr
Mitchell
to use only Dr Bhimagunta as his surgical assistant. Equally, there
was no commitment from Dr Bhimagunta to work only with Mr
Mitchell,
although in
practice he only assisted Dr
Mitchell.
There was no commitment by Mr
Mitchell
to provide work to Dr Bhimagunta – the work was ad hoc.
39. Dr Bhimagunta had included the payments from Mr Mitchell
in respect
of his role as a surgical assistant on his income tax returns, although we
understood that these returns had been filed late.
40. The issue in this appeal, beguiling in its apparent simplicity, is
whether Dr Bhimagunta was Mr Mitchell's
employee when he assisted Mr
Mitchell
in operations on Mr
Mitchell's
private patients. Mrs Walker, for
HMRC,
helpfully
cited a number of authorities which we shall now consider in more detail.
41. As a general matter, the authorities suggest various
guidelines or
indicia which can be used in
various
different factual circumstances to
determine whether an engagement is a contract of employment or a contract for
services (i.e. the hiree is self-employed). We consider these indicia later in
this decision. For present purposes, however, they can be summarised as
follows:
(1)
the well-known threefold test set out by
MacKenna J in Ready Mixed Concrete (South East) Ltd v.
Minister of
Pensions and National Insurance [1968] 1 All ER 433;
(2)
whether the worker is in business on his own
account: see in particular the judgment of Cooke J in Market Investigations
Ltd v
Minister of Social Security [1969] 2 QB 173;
(3)
the "mutuality of obligation" test:
see the judgment of Park J in Usetech Ltd v.
Young (HMIT) [2004] STC 1671 and Cornwall County Council
v
Prater [2006] EW CA Civ 102;
(4)
the "substitution issue": see the
decision of the Court of Appeal in Express & Echo Publications Ltd v
Tanton [1999] EWCA Civ 949, the decision of Park J in Usetech (see above)
and the decision of Henderson J in Dragonfly Consultancy Ltd
v
The
Commissioners for Her Majesty's Revenue & Customs [2008] EWHC 2013 (Ch);
(5) the influence of the surrounding terms; and
(6) the intentions of the parties.
42. It is important to understand, however, that the courts have warned
against a mechanistic approach to these tests. Each case must be decided on its
own individual facts. The hirer-hiree relationship (to use neutral expressions)
must be examined in detail in each case. The factual matrix may mean that some
of the indicia mentioned above are very
important or even determinative of the
nature of the relationship. In other cases, the same indicia will be of little
help (or may even be irrelevant) in determining whether the relationship is that
of employment or self-employment.
43. In Hall v
Lorimer 66
TC
349 Mummery J said (at 366G):
"In order to decide whether a
person carries on business on his own account, it is necessary to consider many
different aspects of that person's work activity. This is not a mechanical
exercise of running through items on the checklist to see whether they are
present in, or absent from, a given situation. The object of the exercise is to
paint a picture from the accumulation of detail. The overall effect can only be
appreciated by standing back from the detailed picture which has been painted,
by viewing
it from a distance and by making an informed, considered,
qualitative appreciation of the whole. It is a matter of evaluation of the
overall effect of the detail, which is not necessarily the same as the sum of
the individual details. Not all details are of equal weight would importance in
any given situation. The details may also
vary
in importance from one situation
to
another."
"Mr Goldsmith invited us to
adopt the same approach as that of Lord Griffiths in applying the test or
indicia set out by Cooke J [in Market Investigations Ltd v
Minister of Social
Security [1969] 2 QB 173]. That is an invitation which I
view
with some
reserve. In cases of this sort there is no single path to a correct decision.
An approach which suits the facts and arguments of one case may be unhelpful in
another."
45. Nolan LJ continued (at 375 I) by expressing approval of the comments
of Vinelott
J in Walls
v
Sinnett 60
TC
150 at 164 where the learned
judge said:
"It is in my judgment, quite
impossible in the field where a very
large number of factors have to be weighed
to gain any real assistance by looking at the facts of
another
case and
comparing them one by one to see what facts are in common, what are different
and what particular weight is given by
another
tribunal to the common facts.
The facts as a whole must be looked at, and what may be compelling in one case
in the light of all the facts may not be compelling in the context of
another
case."
46. In our view,
with respect, these comments set out the correct
approach to be adopted by this Tribunal in determining the question whether Dr
Bhimagunta was Mr
Mitchell's
employee or whether he was self-employed. The
detailed nature of the working relationship between Mr
Mitchell
and Dr
Bhimagunta and all the surrounding circumstances must be examined. The
various
indicia mentioned above must then be applied to that detailed factual matrix,
with the Tribunal using its judgment to evaluate the weight or relevance of the
indicia involved and taking care to look at the picture as a whole. In the end,
there is no one test that can determine every case. The process, once the facts
and circumstances are determined, is one of evaluation and where mechanical
application of the guidance contained in the many decided cases on this topic
is to be avoided.
48. MacKenna J set out his well-known test (at at 439) as follows:
“I must now consider what is meant by a contract of service. A contract of service exists if the following three conditions are fulfilled: (i) The servant agrees that in consideration of a wage or other remuneration he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.”
49. . As regards (i) he said (at 440):
"There must be a wage or other remuneration.
Otherwise there will be no consideration, and without consideration no contract
of any kind. The servant must be obliged to provide his own work and skill.
Freedom to do a job either by one's own hands, or by another's
is inconsistent
with a contract of service, though a limited or occasional power of delegation
may not be...."
50. The first test
appears to concern the ability to substitute another
person to carry out the
work -- as to which, see below. We describe the second and third tests in more
detail below.
"Control includes a part of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when, and the place when it shall be done. All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The right need not be unrestricted."
52. It should be
noted that in Market Investigations Ltd v
Minister of
Social Security [1969] 2 QB 173 Cooke J (at 183) expressed
the
view
that an analysis of the extent and degree of control was not in itself
decisive. Cooke J referred to Morren
v
Swinton and Pendlebury Borough
Council [1965] 1 WLR567 where Lord Parker CJ pointed out (at 582):
The cases have over and
over again stressed the importance of the factor of superintendence and
control, but that it is not the determining test is quite clear. In Cassidy v
style='color:windowtext;text-decoration:none'> The Minister of Health
[1951] 2 K.B. 343,
351. Somervell L.J., referred to this matter, and instanced, as did Lord
Denning in the later case of Stevenson, Jordan & Harrison
v.
McDonald & Evans [1952] 1 T.L.R. 101, C.A. that
clearly superintendence and control cannot be the decisive test when one is
dealing with a professional man, or a man of some particular skill and
experience. Instances of that have been given in the form of the master of a
ship, an engine driver, or a professional architect, or as in this case, a
consulting engineer. In such cases there can be no question of the employer
telling him how to do work, therefore the absence of control and direction in
that sense can be of little, if any, use as a test. "
"Cases such as Morren's case [1965] 1 WLR 576 illustrate how a contract
of service may exist even though the control does not extend to prescribing how
the work shall be done. On the other hand, there may be cases when one who
engages another
to do work may reserve to himself full control over how the
work is to be done, but nevertheless the contract is not a contract of service.
A good example is Queensland Stations Proprietary Ltd.
v.
Federal
Commissioner of Taxation (1945) 70 C.L.R. 539, the "drover" case,
where Dixon J. said, at p. 552:
"In considering the facts it is a mistake to treat as decisive a reservation of control over the manner in which the droving is performed and the cattle are handled. For instance, in the present case the circumstance that the drover agrees to obey and carry out all lawful instructions cannot outweigh the countervailing considerations which are found in the employment by him of servants of his own, the provision of horses, equipment, plant, rations, and a remuneration at a rate per head delivered."
If control is not a decisive test, what then are the other considerations which are relevant? No comprehensive answer has been given to this question, but assistance is to be found in a number of cases."
54. Cooke J then set
out an alternative test, viz
whether the person was engaged in business on his
own account, and we consider this test later in this decision.
55. In Dragonfly
Consultancy Ltd v
The Commissioners for Her Majesty's Revenue & Customs
[2008] STC 3030 (Ch) Henderson J held that a highly skilled IT system tester
was an employee. The worker in question worked exclusively for the AA number of
periods of several months. Although the worker was not subject to control as to
how the work was done, he was subject to regular appraisal and monitoring.
Henderson J said (at 3068):
"On the strength of the oral evidence, the Special Commissioner was
in my view
fully entitled to conclude that Mr Bessell's performance of his
duties was subject to a degree of supervision and quality control which went
beyond merely directing him when and where to work. In the case of a skilled
worker, you do not expect to find control over how the work is done.
Conversely, in the case of a self-employed worker in business on his own
account you would not normally expect to find regular appraisal and monitoring
of the kind attested to by Mr Palmer and Miss Tooze. The weight and
significance to be attached to this evidence was a matter for the Special
Commissioner, and in my
view
it was open to him to conclude that the nature and
degree of the control by the AA under the hypothetical contract was on balance
a pointer towards employment."
57. Finally, before
leaving the subject of control, it should be noted that the reference by
MacKenna J to the test of control including the thing to be done and the time
and place at which it shall be done are factors which need to be weighed in the
balance. However, specifying the job that needs doing and the time and place in
which should be done will often be factors which arise in a contract for
services where a hirer engages an independent contractor. If you say to a
plumber, for example, 'please fix my leaking pipe at my home on Thursday
morning' that cannot, in our view,
turn a self-employed plumber into an
employee. Nonetheless, they are factors which can be taken into account in the
overall factual matrix. In addition, at the risk of stating the obvious, the
circumstances (rather than the hirer) may dictate the nature of the job that
needs to be done, as well as the place and the time of performance.
“…control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor'. The fundamental question which has to be asked is whether the person who has engaged himself to perform the services in question is performing them as a person in business on his own account. If the answer to that question is 'yes', then the contract is a contract for services. If the answer is 'no', then the contract is a contract of service.”
59. Cooke J said that there is no exhaustive list which could be
compiled of the considerations which are relevant in answering that question,
nor could strict rules be laid down as to the relative weight which the various
considerations should carry in particular cases. Apart from control, factors,
which may be of importance included
“…are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk takes [sic], what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task …'
60.
In Lee Ting Sang v
Chung Chi-Keung [1990] 2 AC 374 the Privy Council (in a judgment
delivered by Lord Griffiths) approved the approach of Cooke J in Market Investigations,
saying (see [1990] 2 AC 374 at 382) that 'the matter had never been better put.'
61. In Hall v
Lorimer the Court of Appeal noted
the limitations of Cooke J's formulation in relation to professional persons.
Nolan LJ observed (at 377):
" Again the
question, whether the individual is in business on his own account, though
often helpful, may be of little assistance in the case of one carrying on a
profession or vocation.
A self-employed author working from home or an actor or
a singer may earn his living without any of the normal trappings of a business.
For my part I would suggest there is much to be said in these cases for bearing
in mind the traditional contrast between a servant and an independent
contractor. The extent to which the individual is dependent upon or independent
of a particular paymaster for the financial exploitation of his talents may
well be significant. It is, I think, in any event plain that Cooke J. in Market Investigations Ltd.
v.
Minister of Social Security [1969] 2 Q.B. 173 was not intending to lay down an all purpose
definition of employment. For example, his test does not mention the duration
of the particular engagement or the number of people by whom the individual is
engaged.
62. In our view,
Nolan LJ is simply illustrating the general principle that, whilst all tests
are potentially helpful and should be considered, the facts may be such that
some tests or indicia may be of limited relevance or usefulness. In this case,
he notes that a person whose activity comprises that person’s particular
professional or artistic skill or experience may require few, if any, trappings
or minimal apparatus of a self-employed business. In such cases, the type of
activity will determine whether Cooke J's test is particularly relevant. As
regards the difficulties of applying the
various
tests to highly skilled
professional workers Nolan LJ commented, earlier in his judgment, (at 375):
“Mr. Goldsmith
acknowleged that the work of the taxpayer, unlike that of Mr. Lee Ting Sang,
depended upon his own rare skill and judgment but submitted that the nature and
degree of skill involved in the work cannot alone be decisive. Again I agree. A
brain surgeon may very
well be an employee. A window cleaner is commonly
self-employed.”
63. Nolan LJ continued (at 377):
" Mr. Goldsmith
submitted that the fundamental distinction between a contract of employment and
a contract for service is that in the former the contracting party sells his
skill or labour; in the latter he sells the product of his labour. In one case
the employer buys the man; in the other he buys the job. If that were right, it
would have provided a short and simple answer in Market Investigations Ltd. v.
Minister of Social Security [1969] 2 Q.B. 173; Fall
v.
Hitchen [1973] 1 W.L.R.
286 and Lee Ting Sang
v.
Chung Chi-Keung
[1990] 2 AC 374; but that aside, I find the distinction
very
hard
to apply in the case of a professional man. Surely the self-employed barrister
advising in his chambers or the doctor advising in his surgery is selling his
skill and labour and not its product. If the scene shifts to the court or to
the operating theatre can the client or patient really be said to be buying the
product which may be disastrous in spite of the best efforts of the advocate or
the surgeon in the litigation or operation?”
64. In Nethermere
(St Neots) Ltd v
Taverna and Gardiner [1984] ICR 612 the Court of Appeal
referred to the first limb of MacKenna J's three tests referred to above.
Stephenson LJ said (at 623):
"There must, in my judgment, be an irreducible minimum of obligation on each side to create a contract of service. I doubt if it can be reduced any lower than in the sentences I have just quoted."
65. In Usetech Ltd v.
Young (HMIT) [2004] STC 1671 Park J
said:
“If there is a relationship between
a putative employer and employee, but it is one under which the 'employer' can
offer work from time to time on a casual basis, without any obligation to offer
the work and without payment for periods when no work is being done, the cases
appear to me to establish that there cannot be one continuing contract of
employment over the whole period of the relationship, including periods when no
work was being done. There may be an 'umbrella contract' in force throughout
the whole period, but the umbrella contract is not a single continuing contract
of employment. See Clark v
Oxfordshire Health Authority [1998] IRLR 125 (Court of Appeal); Carmichael
v
National Power
PLC [1999] 1 WLR 2042 (House of Lords);Stevedoring & Haulage
Services Ltd
v
Fuller [2001] EWCA Civ 651, [2001] IRLR 627 (Court of Appeal).
That leaves open the possibility
that each separate engagement within such an umbrella contract might itself be
a free-standing contract of employment, and it was, I believe, that concept
which the Special Commissioner had in mind as covering this case. That is
consistent with his referring in the same paragraph of his decision to the
decision in Market Investigations Ltd v
Minister of Social
Security [1969] 2
QB 173,[1968] 3
All ER 732, in which part time interviewers for a market research
company were held to be engaged under a series of separate contracts of
employment. The judgment of Cooke J in that case contains a
valuable
and much
cited discussion of principles which are relevant to distinguishing between
contracts of employment and contracts for services rendered in a self-employed
capacity (see especially [1969] 2
QB 173 at 184–185, [1968] 3
All ER 732 at 737–738).
I confess that I have doubts about the factual conclusion which the learned
judge reached when he applied the principles to the facts of the case. For
myself, I see considerable force in the alternative analysis, namely that the
interviewers provided their services on a free lance or casual basis and not as
employees. See for an example of an analysis of that nature O’Kelly
v
Trusthouse Forte plc [1984] QB
90, [1983]
IRLR 369.”
66. In Cornwall County Council v
Prater
[2006] EW CA Civ 102 the Council engaged Mrs Prater as a home tutor to teach
children who were unable to attend school. She worked under different
engagements for the Council for almost 10 years. She taught some pupils for
five hours a week and others for as much as 10 hours a week. The duration of
the individual engagements
varied
from a few months to several years. It was
argued on behalf of the Council that there was no mutuality of obligation
because there was no on-going duty to provide work and there was no ongoing
duty to accept work. The Court of Appeal rejected this argument. Longmore LJ
said (at paragraph 43):
"There was a mutuality of obligation in each engagement namely that the County Council would pay Ms Prater for the work which she, in turn, agreed to do by way of giving tuition to the people for whom the Council wanted her to provide tuition. That is to my mind is sufficient "mutuality of obligation" to render the contract a contract of employment if other appropriate indications of such an employment contract are present."
“The question whether there is mutuality of obligation is not the complete test for determining whether a contract of service exists. I would have thought that the question of mutuality of obligation goes to the question whether there was a contract at all, rather than what kind of contract there was, if a contract existed. However the alleged lack of mutuality of obligation is the only ground of appeal."
68. We adopt the
summary of the law, as regards mutuality of obligation, set out by the Special
Commissioner (Howard Nowlan) in Castle Construction Ltd v
The Commissioners
for Her Majesty's Revenue & Customs Spc 00723:
"I think that a fair summary ...is that:-
- it is not clear, within the confines of one contract, that anything more is required to establish a contract of employment than the obligation to work and the obligation to pay;
-when considering whether the umbrella contract that
links various
separate employment contracts constitutes one continuous
employment contract, there must then be some obligation to provide work or to
offer work for the umbrella contract to constitute a continuing contract of
employment; and
-an obligation on the employer to provide work, or in the absence of available work to pay, whilst not a precondition to a single contract ranking as an employment contract, is nevertheless a “touchstone” or a feature that one would expect to find in an employment contract."
69. We entirely
agree with the comments of the learned Special Commissioner and of Lewison J.
Once the "mutuality of obligation" test is understood as not
requiring, in the context of a series of engagements, the hirer to promise or
offer work other than in respect of each individual engagement, it does not in
our view
provide much assistance in determining the question currently before
the Tribunal.
70. As already
noted, MacKenna J in Ready Mixed Concrete considered that an employee
must be obliged to provide his own work and skill. The ability to do a job "either
by one's own hands or by another's
is inconsistent with the contract of
service...." (at 515).
71. In Express & Echo Publications Ltd v
Tanton [1999] EWCA Civ 949 Gibson LJ appeared to suggest that any contract for
services which contained any right for the worker to provide a substitute can
never be a contract of employment. This was doubted by Park J in Usetech
(at 1697) and he said (at 1699):
"As it seems to me
the present state of the law is that whether a relationship is an employment or
not requires an evaluation of all of the circumstances. In the words of Hart J
in Synaptek
Ltd v
Young [2003] STC
543, 75
TC
51,
para 12, the context is one 'where the answer to be given depends on the relative weight to
be given to a number of potentially conflicting indicia'. The presence of a substitution clause is an indicium
which points towards self-employment, and if the clause is as far-reaching as
the one in Tanton it may be determinative by itself."
72. These views
of
Park J were endorsed by Henderson J in Dragonfly (at 3061).
73. Finally, in Belcher
v
Autoclenz Ltd [2009] EWCA Civ 1046 the
Court of Appeal considered whether an express term in a contract which allowed
substitution had to be disregarded because it did not represent the true
intentions of the parties. Smith LJ said (at paragraph 53):
"In my judgment the true position, consistent with Tanton, Kalwak and Szilagyi, is that where there is a dispute as to the genuineness of a written term in a contract, the focus of the enquiry must be to discover the actual legal obligations of the parties. To carry out that exercise, the tribunal will have to examine all the relevant evidence. That will, of course, include the written term itself, read in the context of the whole agreement. It will also include evidence of how the parties conducted themselves in practice and what their expectations of each other were. Evidence of how the parties conducted themselves in practice may be so persuasive that the tribunal can draw an inference that that practice reflects the true obligations of the parties. But the mere fact that the parties conducted themselves in a particular way does not of itself mean that that conduct accurately reflects the legal rights and obligations. For example, there could well be a legal right to provide a substitute worker and the fact that that right was never exercised in practice does not mean that it was not a genuine right."
74. Aikens LJ (with whom Sedley LJ concurred) put the point rather differently (at paragraph 91):
"Thus, in cases where there is a dispute as to the genuineness of the written terms of a contract relating to work or services, the focus of the enquiry must be to discover the actual legal obligations of the parties. Speaking for myself, I would respectfully suggest that it is not helpful to say that a court or tribunal has to consider whether the words of the written contract represent the “true intention” or the “true expectation” of the parties. There is a danger that a court or tribunal might concentrate too much on what were the private intentions or expectations of the parties. What the parties privately intended or expected (either before or after the contract was agreed) may be evidence of what, objectively discerned, was actually agreed between the parties: see Lord Hoffmann's speech in the Chartbrook case at [64] to [65]. But ultimately what matters is only what was agreed, either as set out in the written terms or, if it is alleged those terms are not accurate, what is proved to be their actual agreement at the time the contract was concluded. I accept, of course, that the agreement may not be express; it may be implied. But the court or tribunal's task is still to ascertain what was agreed."
75. The third of
the requirements that MacKenna J listed, seemed to the Special Commissioner
(Howard Nowlan) in Castle Construction Ltd v
The Commissioners for Her
Majesty's Revenue & Customs Spc 00723 essentially to be making the
point that one must finally look to all the terms, or indeed the notable
absence of terms, in order to judge whether these reinforce or undermine the
initial conclusions reached by applying the first two tests.
76. The Court of Appeal
(Gibson LJ) in Express and Echo Publications Ltd v
Tanton [1999] ICR 693 described the
approach to be adopted as follows (at 697):
"(1) The tribunal should establish what were the terms of the agreement between the parties. That is a question of fact.
(2) The tribunal should then consider whether any of the terms of the contract are inherently inconsistent with the existence of a contract of employment. That is plainly a question of law, and although this court, as indeed the appeal tribunal before us, has no power to interfere with findings of fact (an appeal only lies on a point of law), if there were a term of the contract inherently inconsistent with a contract of employment and that has not been recognised by the tribunal's chairman, that would be a point of law on which this court, like the appeal tribunal before us, would be entitled to interfere with the conclusion of the chairman.
(3) If there are no such inherently inconsistent terms the tribunal should determine whether the contract is a contract of service or a contract for services, having regard to all the terms. That is a mixed question of law and fact."
78. In the Dragonfly case Henderson J (at 3068) said:
"Having dealt at some length
with the issues of substitution and control, I can now deal more briefly with
the two remaining grounds of appeal. The main reason for this, so far as
intention is concerned, is that statements by the parties disavowing any
intention to create a relationship of employment cannot prevail over the true
legal effect of the agreement between them. It is true that in a borderline
case a statement of the parties' intention may be taken into account and may
help to tip the balance one way or the other: see Ready Mixed Concrete ([1968] 2 QB 497 at 513) and Massey v
Crown Life Insurance Co [1978] 2 All ER 576, [1978] 1 WLR 676. In the majority of cases, however,
such statements will be of little, if any, assistance in characterising the
relationship between the parties."
79. We intend to
examine the various
tests or indicia discussed above and then, applying the
guidance of Mummery J in Hall
v
Lorimer, to stand back and evaluate the
overall picture.
80. Mr Mitchell's
describes his role in an operation as akin to that of a conductor of an
orchestra. On the basis of the evidence we consider this to be an apt
description. There is no doubt that all members of the operating team – Dr
Bhimagunta, the anaesthetist, the perfusionists and the theatre nurses -- are
subject to the overall control and coordination exercised by Mr
Mitchell.
However, within the overall control, each highly trained member of the team
performs his or her
very
specialised tasks with limited input from Mr
Mitchell.
This is only to be expected. As Mr
Mitchell
put it he tends to have his own
hands full -- quite literally -- inside a patient's chest.
81. In Dr Bhimagunta’s
case, he was expected to perform his role with minimum supervision from Mr
Mitchell.
Indeed, one of the main reasons why Dr Bhimagunta was used by Mr
Mitchell
as the surgical assistant was because he required minimal amounts of
instruction and Mr
Mitchell
knew his working methods extremely well and liked
them. Dr Bhimagunta was so well used to operating with Mr
Mitchell
that they
had an almost intuitive working relationship such that they delivered the best
possible procedure for patient safety. Whilst it is true that Mr
Mitchell
and
Dr Bhimagunta were both cardiac surgeons and that, therefore, Mr
Mitchell
could
more easily have intervened than, say, would have been the case had an issue
arisen as regards anaesthetics or the perfusionists, there is no indication on
the evidence that he was required to do so.
82. We consider that
the test of control in this case is of limited assistance. We have already
mentioned the comments of Lord Parker CJ in Morren v
Swinton and Pendlebury Borough Council and of Cooke J in Market
Investigations Ltd
v
Minister of Social Security to the effect that, in
some cases, particularly as regards a highly specialised or skilled
professional person, the control test may not be decisive or, indeed,
particularly helpful. We consider this to be true in this case.
83. We therefore
conclude that Mr Mitchell's
overall control of an operation is broadly neutral
as regards the issue of Dr Bhimagunta’s employment status.
84. As regards the
fact that Mr Mitchell
determined the time, the place and the nature of the
operation, once again we do not consider that these factors assist greatly in
determining whether Dr Bhimagunta was self-employed or an employee. The place
of the operation was determined by the limited availability of private
hospitals in Nottingham. The hospitals available work, according to the
evidence, the Park Hospital or the City Hospital. Mr
Mitchell's
evidence was
that the City Hospital did not like making itself available for private
operations and therefore most operations took place at the Park Hospital.
85. In relation to
the time of the operation, this was largely dependent on theatre availability
as well as the availability of Mr Mitchell
and the members of the medical team.
86. The nature of
the operation was, as Mr Mitchell
pointed out, determined by the patient's
condition. It is true that Mr
Mitchell
would determine the nature of the
surgical procedure to be performed and whether such a procedure was advisable
in relation to the patient in question, but clearly whether a
valve
replacement
or whether bypass surgery was required would ultimately be determined by the
condition from which the patient was suffering.
87. Once again,
therefore, Mr Mitchell's
determination of the place, time and nature of the
operation, influenced mainly by circumstances, seems to us to be largely a
neutral factor. In any event, the determination of the time, place and nature
of activity will often be a feature of a contract formed between and engager
and a self-employed person.
88. As we have already
indicated we consider that "the mutuality of obligation" test does
not provide much assistance in this case. We consider that there was no
obligation on the part of Mr Mitchell
to provide work to Dr Bhimagunta
otherwise than in relation to each specific operation which was arranged.
Clause 13 of the Agreement of 1 February 2005 makes this clear. It was also
clear from the evidence that Mr
Mitchell
used Dr Bhimagunta's services as and
when required and Mr
Mitchell
was under no obligation to use his services or to
provide him with work other than in respect of each individual engagement. It
is clear, therefore, that the agreement dated 1 February 2005 was not an
"umbrella" contract of employment. However, the test of mutuality of
obligation provides little assistance, in our
view,
as to whether each
individual engagement was itself a contract of employment.
89. Clause 5 of the
Agreement of 1 February 2005 permits Dr Bhimagunta to supply a substitute to
assist in an operation. Mr Mitchell's
evidence, however, clearly contradicted
this. If there were to be a genuine right of substitution this would be a
strong indicator that the relationship between Mr
Mitchell
and Dr Bhimagunta
was not one of employment.
90. The evidence at
the hearing clearly indicated that, in practice, this right of substitution
(i.e. a right which Dr Bhimagunta could exercise) did not exist. Mr Mitchell
made it plain that he would not accept a substitute unless it was someone whom
he already knew well and Dr Bhimagunta accepted that he had never in practice
exercise a right to put forward a substitute.
92. As regards
substitution, we therefore conclude that the absence of an effective right of substitution
is in this case is neutral on the question whether Dr Bhimagunta was an
employee or self-employed in relation to Mr Mitchell's
private operations.
(1) does the individual provide his own equipment;
(2) whether he hires his own helpers;
(3) what degree of financial risk he takes,;
(4) what degree of responsibility for investment and management he has; and
(5) whether and how far he has an opportunity of profiting from sound management in the performance of his task.
94. Own equipment:
There is no clearer indication of the wisdom of Mummery J's warning in Hall
v
Lorimer about the danger of conducting a mechanical exercise of running
through points on a checklist than deploying this test in this case. Whilst the
test may be a useful one in other contexts it is of no relevance in this case.
The only equipment that either Mr
Mitchell
or Dr Bhimagunta were expected to
provide at an operation was their surgical goggles. They plainly could not have
provided the surgical instruments. Cardiac surgery, like any other major
surgery, is conducted in a sterile environment. The surgical instruments
required for each operation would be provided by the hospital not by the
surgeons.
96. Degree of
financial risk: Mr Mitchell
paid Dr Bhimagunta when he himself was paid by
the patient or the insurance company. Mr
Mitchell
had never failed to pay Dr Bhimagunta.
If an operation was cancelled, Dr Bhimagunta would not be paid even if he
turned up (with the operation was cancelled at the last minute e.g. because the
patient had an infection). We conclude that Dr Bhimagunta was exposed to
minimal financial risk. Subject to the point made below about the general
usefulness of Cooke J's test as to whether a person can be said to be in
business on his own account, we consider that this factor points marginally
towards employment.
99. The last of the
three tests suggested by Cooke J seem to us of limited application in the
present case. As Nolan LJ said in Hall v
Lorimer in relation to Cooke
J's test:
"Again the
question, whether the individual is in business on his own account, though
often helpful, may be of little assistance in the case of one carrying on a
profession or vocation.
A self-employed author working from home or an actor or
a singer may earn his living without any of the normal trappings of a business."
100.We
respectfully agree with Nolan LJ's comments when applying Cooke J's test to the
facts of this appeal. Dr Bhimagunta was called on by Mr Mitchell
to play an
important but essentially limited role which required a high degree of
specialist skill. It was not a role which required the trappings, as Nolan LJ
put it, of a business. Dr Bhimagunta was selling his particular skill on an
occasional basis. The nature of that activity did not require the more
elaborate apparatus of a business.
101.We therefore
consider that the last three aspects of Cooke J's test, although pointing
marginally towards employment when viewed
in isolation, are of limited
assistance in this case.
102.Nolan LJ
indicated in Hall v
Lorimer that, in the context of a professional
person (by which we take into mean a highly trained or specialised worker) the
duration of engagements and whether the individual was dependent on one engager
should also be considered. In Hall
v
Lorimer the individual performed a
large number of engagements which lasted on average from one to two days and
was engaged by a large number of different people.
103.In this case,
Dr Bhimagunta was engaged sporadically (but on a considerable number of
occasions) by the same engager (Mr Mitchell)
but for a limited period of time
-- usually two to four hours per operation. We accept Mr
Mitchell's
evidence
that there is no pattern regarding the frequency of operations -- there could
be several operations within a short period of time and there may be no
operations for several months. The fact that there was only one engager is a
factor which, in our
view,
points towards employment. On the other hand, the ad
hoc nature of the engagements and their limited duration when combined with a
highly specialised nature of the skills involved, in our
view,
point towards
self-employment. It is true that casual workers can and often will be employees
(e.g. restaurant staff). Nonetheless, when
viewed
in the light of the irregular
pattern of engagements other professional and highly skilled nature of the
expertise supplied by Dr Bhimagunta, our
view
is that these factors tend to
point towards self-employment and outweigh the fact that Mr
Mitchell
is the
only engager. We also take account of the fact that there was no obligation on
Dr Bhimagunta to work exclusively for Mr
Mitchell,
although in practice he did
so because he was not popular with other consultants.
105.We do not
consider any of the terms of the agreement of 1 February 2005 to be
determinative of Dr Bhimagunta's status. The terms are clearly intended to
convey the impression that he is self-employed and that he is not an employee.
Clause 10 states that there is no entitlement to sick pay, holiday pay or bank
holiday pay and the Sub Contractor is not entitled to employment rights. This
provision, in our view,
is broadly neutral in determining whether Dr Bhimagunta's
status. The absence of an entitlement to sick pay, holiday pay or bank holiday
pay seems to us entirely consistent with the sporadic and short-term nature of
the engagements envisaged. Similar considerations apply to the absence of pension
benefits (clause 15). Moreover, the right of both parties to terminate the
contract immediately without notice (clause 12) seems to us a provision which
is appropriate for the sporadic and short-term nature of the work to be
provided and is neutral on the question of employment status.
106.Clause 13
places no obligation on the Contractor to provide work or for the Sub
Contractor to accept an engagement. Although this clearly indicates that the
agreement of 1 February 2005 is not a contract of employment, it does not, in
our view,
determine the question whether once Mr
Mitchell
offers an engagement
and Dr Bhimagunta agrees to accept it, whether that agreement is itself a
contract of employment.
108.The
authorities indicate that the intention of the parties is not determinative,
except perhaps borderline cases. In our view,
in this case, the contract of 1
February 2005 clearly indicates an intention that the relationship between Mr
Mitchell
and Dr Bhimagunta would be one of self-employment. The contract is
explicit on this point (clause 20).
109. Having
examined each indicium or test in turn, we now step back and look at the
overall picture in accordance with Mummery J's guidance and that of the Court
of Appeal in Hall v
Lorimer.
113. Fourthly, as
regards whether Dr Bhimagunta was in business on his own account, three of the
five tests set out by Cooke J in Market Investigations might at first
sight point marginally towards employment. However, when viewed
in the context
of the activities involved, these tests seemed to us to be of limited
usefulness in the present case. We therefore conclude that on the "in business
on his own account" test the result is broadly neutral.
114. Fifthly, as
regards the tests set out by Nolan LJ in Hall v
Lorimer, we consider
that the ad hoc, sporadic and limited duration of the engagements concerned
point towards self-employment and cancel out and outweigh the fact that Mr
Mitchell
was the only person with whom Dr Bhimagunta undertook engagements.
Equally, the fact that Dr Bhimagunta was paid a fixed rate for his part in any
operation regardless of the time involved and of any post-operative work
required is suggestive of a contract for services. Frequently, in business, an
independent contractor will agree a fixed price contract, thereby taking the
risk that the job may overrun in terms of cost or time. Dr Bhimagunta clearly
took the risk that an operation could be far more time-consuming than
anticipated.
117.Overall,
therefore, we consider that none of the tests set forth in the authorities
provides a compelling answer in this appeal. On balance, we have reached the
conclusion that the very
limited nature of the engagements, their ad hoc and
sporadic occurrence, the fixed-price paid per operation, when taken together
with the
very
skilled professional services which Dr Bhimagunta was required to
supply indicates a contract for services rather than a contract of employment.
In a borderline case such as this, we believe that we can take into account the
fact that both parties specifically intended that Dr Bhimagunta would be
self-employed. Usually, the intention of the parties will not be determinative,
but in cases of doubt such as this we believe that the intention of Mr
Mitchell
and Dr Bhimagunta can properly be taken into account.
118.Accordingly,
we consider that Dr Bhimagunta was self-employed as regards private operations
in which he assisted Mr Mitchell
during the relevant periods. We therefore
allow this appeal.