The Hospital Medical Group Ltd v Westwood

Factual and Procedural Background

The case concerns whether an individual, referred to as the Plaintiff, working under an agreement with Company A, was a "worker" within the meaning of section 230(3) of the Employment Rights Act 1996, thereby qualifying for statutory protections related to unlawful deductions from wages and holiday pay. The Plaintiff, a medical professional with an established independent practice, entered into successive contracts with Company A to perform hair restoration surgery services. These contracts described the Plaintiff as an independent contractor and contained terms consistent with self-employment, including responsibility for taxes, professional indemnity insurance, and absence of mutual obligation to accept work.

The Plaintiff challenged the termination of the agreement and claimed entitlement to unlawful deductions and accrued holiday pay, asserting worker status. The Employment Tribunal (ET) found that the Plaintiff was engaged as a self-employed independent contractor but also held that the Plaintiff met the limb (b) definition of "worker" under section 230(3)(b) because the Plaintiff personally performed services and Company A was not a client or customer of the Plaintiff's business. The ET thus accepted jurisdiction over the claims.

Company A appealed to the Employment Appeal Tribunal (EAT), which upheld the ET's decision, agreeing that the Plaintiff was a limb (b) worker, emphasizing that the Plaintiff was recruited exclusively to provide services integral to Company A’s operations and did not offer those services to the world at large. Permission to appeal to the higher court was initially refused but later granted to consider the consistency of the jurisprudence concerning limb (b) workers.

Legal Issues Presented

1. Whether the Plaintiff qualifies as a "worker" under section 230(3)(b) of the Employment Rights Act 1996, entitling him to statutory protections for unlawful deductions and holiday pay.
2. The proper interpretation and application of the "status exception" within the limb (b) definition, specifically whether Company A was a "client or customer" of the Plaintiff's business.
3. The relevance and application of the Plaintiff’s engagement as being "in business on his own account" to the worker status analysis.

Arguments of the Parties

Appellant's Arguments

• The wording of section 230(3)(b) clearly supports the Appellant's position that the Plaintiff was not a worker but a self-employed individual carrying on a business on his own account.
• The Employment Tribunal and Employment Appeal Tribunal erred by failing to recognize that the Plaintiff’s business included his work for Company A, making Company A a client or customer of the Plaintiff’s business.
• The status exception in section 230(3)(b) should not be treated as a separate hurdle; if the Plaintiff conducted business on his own account and Company A was a client, the Plaintiff falls outside the worker definition.
• The Appellant argued that this approach would provide greater certainty and predictability in borderline cases.

Respondent's Arguments

The opinion does not contain a detailed account of the Respondent's legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court carefully analyzed the statutory definition of "worker" under section 230(3)(b), emphasizing that three requirements must be met: (1) the individual must have entered into or work under a contract to perform work or services personally; (2) the work must be performed personally; and (3) the other party to the contract must not be a client or customer of any business undertaking carried on by the individual by virtue of the contract.

The Court accepted the Employment Tribunal’s factual findings that the Plaintiff was engaged personally to provide services and that the contract was one for services rather than employment. The critical issue was whether Company A was a client or customer of the Plaintiff’s business. The Court rejected the Appellant’s argument that because the Plaintiff was in business on his own account, Company A must be a client or customer. It distinguished the Plaintiff’s separate businesses and focused on the specific contract with Company A.

The Court adopted the "integration" test from Cotswold, finding that the Plaintiff was recruited exclusively to provide services integral to Company A’s operations, did not market those services to the world at large, and was not in business with Company A as a client or customer. This indicated the Plaintiff was a limb (b) worker. The Court further noted that the statutory wording requires the status exception as a distinct hurdle and that the Appellant’s approach would improperly negate this requirement.

The Court also expressed reservations about the general applicability of Smith v Hewitson and reiterated that no universal test applies; rather, the determination depends on the specific contractual and factual matrix. The Court concluded that the Employment Tribunal and Employment Appeal Tribunal had correctly applied the law and facts.

Holding and Implications

The Court dismissed the appeal.

The holding confirms that the Plaintiff qualifies as a "worker" under limb (b) of section 230(3) of the Employment Rights Act 1996 and is therefore entitled to statutory protections concerning unlawful deductions and holiday pay. The decision underscores the necessity of a nuanced, fact-specific approach to the worker status inquiry, particularly the importance of the "status exception" as a separate element. It reinforces the applicability of the "integration" test as a useful analytical tool in determining whether an individual is integrated into the business of the contracting party rather than operating a separate business with that party as a client or customer.

The ruling does not establish a universal test but provides guidance for future cases involving limb (b) workers, emphasizing careful consideration of contractual terms and factual circumstances without overriding statutory language.