Analysis of Hospital Medical Group Limited versus Westwood - Case Study Example

HOSPITAL MEDICAL GROUP LIMITED v westwood EWCA Civ 1005 al Affiliation) Key words: Workers, Employment Facts of the case Dr. Colin Westwood, the claimant in the case, was a doctor with his own practice in Cheshire. He carried out hair restoration services for the defendant, Hospital Medical Group Ltd, on their premises on Saturday mornings. A contractual agreement was struck between them on the basis of self-employment contractor terms. Dr. Westwood, claimed that even though he was responsible for the payment of his own tax liabilities and insurance, he had been an employee of the health group since 2005.He further claimed that he had been offered a provisional role beginning on 1st July 2005 but became more involved with the group since the beginning of 2006. The claimant had initially signed a Practice Privileges Agreement which stipulated basic terms of employment to be provided for the respondent. The agreement categorized the claimant as a consultant who would provide health care for patients in the respondent’s facility. However, the agreement did not specify the mode of payment, or the employment status of the claimant. A written contract for services was entered by both parties on 1st April 2007 followed by a Surgeon’s Contract for Training and services on 1st December 2007. The claimant, while working as a general practitioner for the health body, did not submit formal invoices but submitted informal invoices to the respondent with regards to the patient sessions. He was paid an agreed percentage rate against the sessions he undertook on behalf of Hospital Medical Group Ltd. The respondent terminated the contract via email on 19th August 2010, citing the claimant’s inability to carry out medical services properly. The email stated that the health body had reached its conclusion after receiving concerns from clinicians. Following the termination, Dr. Westwood brought a claim in the Employment Tribunal on grounds of unfair dismissal, unpaid holiday pay and unlawful deduction of wages. The Employment Tribunal judged in favor of the claimant, ruling that he qualified as an employee according to the Employment Rights Act -Section 230(3) (a) and upheld the claimant’s argument of unfair dismissal. The matter was further taken to the Court of Appeal by the company for review. Decision in the case The Health Medical Group’s case was based on the argument that Dr.Westwood did not fall under the category of ‘worker’ as stipulated by the law. The claimant on the other hand, argued that he was indeed an employee of the company. The Court of Appeal rejected the argument that self-employed contractors did not qualify to be listed as workers as stipulated in the Employment Rights Act of 1996. It rejected claims that any individual in business by his own account, could not be classified as a worker under the Employment Rights Act. The court upheld the Employment Tribunals decision in the case of Hospital Medical Group Ltd v Westwood. It decided that Dr.Westwood, who appeared to be an independent self-employed contractor, had met the definition of a worker for the purposes of S.230 (3) (b) of the Employment Rights Act 1996. The act defines a worker as an individual who undertakes to perform any work personally, for another party, 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. Therefore, individuals that meet this definition are “limb (b) workers.” The court held that Mr. Westwood, who was in business on his own, and engaged by the company to perform hair restoration services himself, qualified to be a “limb (b) worker.” The court however rejected the claimant’s argument that he had a singular business under which he conducted his work as a general practitioner, his work for the company and transgender work. The court found that they were three unrelated distinct activities. Legal reasons for the case In the appeal, Judge Peter Clarke felt that the decision of the ET was right by stressing the fact that the work performed by Westwood for the health body was completely separate from the other work he did and that the services he rendered were exclusively for HMG. The judge stated that the statutory protection of employment rights was not provided on a uniform basis. The law was clear in its analysis that some of the rights were only provided on the employees and not employers. Employees are by law, individuals who are under employment or have entered into contract with an employer. Employees’ rights are limited in comparison to the rights of employers and are part of a wider category of workers and employers as well. Part 2 of the Employments Rights Act 1996 protects workers from a wide variety of violations like unfair deduction of wages and unpaid annual leaves. These rights are enshrined in the National Minimum Wage Act 1998, The Public Interest Disclosure 1998, The Working Time Regulations 1998 and The Part-Time Workers-Prevention of Less Favorable Treatment Regulations of 2000.The terms of definition are not constant and are varying. An example is the Part 5 of the Equality Act which is used describe the concept of employment as including both employment under a contract of employment and employment where an individual is contracted personally to perform work or render services. Employment tribunals are tasked with highlighting the varying definitions of employment and workers (Macdonald 1999). In the judge’s decision, he noted that workers have far less protection rights than employees but there were a number of statutory provisions that protected employees and workers such as provisions relating to the national minimum wage, working time, protection of part time workers and statutory control of wage deductions. The undiscussed employment rights like unlawful deductions and holiday pay remain a thorny issue to date. The contentious issue remains the definition of a worker that the Provision in section 230(3) of the Employment Rights Act, 1996 sheds more light. The section describes a worker, excluding terminology like (shop worker and betting worker) to mean an individual who has entered into work under contract or employment or any other contract, expressly or implied, written or oral to undertake work or provide services personally for another party. The contract’s status should not by virtue of that of a client or customer of any profession or business carried out by the individual personally. Reference of any worker should therefore be interpreted accordingly. The act highlighted the issue as to whether the claimant during the provision of the services personally under contractual basis qualified as a worker. If Dr. Westwood fulfilled the conditions stipulated by the Act was entitled to monies for unlawful deduction of pay and accrued holiday pay not paid by the respondent. Decisions regarding limb (b) workers were considered. The cases considered were Cotsworld Developments Construction Ltd (2006) IRLR 181 EAT and James v Redcats (Brands) Ltd IRLR 296 EAT. The court made the observation that in its analysis of the two decisions made, there was no promotion of a test of universal application. A prescriptive approach was adopted in both judgments. As such, the court asserted that the integration test adopted in the Cotsworld case would be more appropriate in the Westwood case. The integration test is used to check if the individual, under investigation for classification as a worker, actively markets his services independently to other parties. If the person has clients and customers, then there is a high probability that he does not qualify as a limb (b) worker, the individual has been hired to work in a position integral to the operations of the other party (Turner 2013). The court however declined the claimant’s assertions that he had one business under which he provided three services to the respondent. Dr.Westwood claimed that the his business included his practice as a general practitioner, his transgender work at the Albany clinic and his work for the health body of hair restoration services. The court ruled that they were actually three distinct unrelated businesses. The concern was which work was done under the contract where he was to provide services or perform work for the Health Medical Group. By virtue of contract, the claimant was only entitled to payments on services of hair restoration for the clinic and not the other services. The court rejected Dr.Westwood’s claims by stating that if Parliament had the intention to provide an excluded category for businesses on their accounts then it would have clearly said so .It was seen as counterintuitive to view the respondent as a client or customer to the claimant’s cause .The respondent could be classified as a general buyer interested in his services as a medical practitioner. The court ruled that even though the claimant did not work for the company under a contract of employment, and was in business on his own account, he qualified as a limb (b) worker since he was an integral part of the hair restoration services he provided to the patients provided by the respondent. Regarding the respondent’s appeal, the Court of Appeal stated that permission to appeal had not been given since the company had high chances for success. The court further stated that the court’s obligation was only to consider the law pertaining to the classification of limb (b) workers. It was the court’s task to give guidance on an approach as to the most uniform way to interpret and apply the statutory provisions of the Employment Rights Act, 1996.The court was however not bound by previous case laws regarding the issues but was satisfied in adopting the formulation given in the Autoclenz Ltd v Belcher and others [2010] IRLR 70 CA case by Aikens LJ. . Significance of the case for current law in the UK Employers have become more aware that the issue regarding their employees’ legal status has become more controversial since the distinction between the classifications of workers, self-employed contractors and employees has become blurred as a result of the ruling made in the Westwood case. Under English tax law, persons paying national insurance and income tax are not employed and hence do not fall under the definition of workers as they have several sources of income. The ruling in the case therefore, has further complicated matters regarding the status of a genuine self-employed person and persons that were previously denied protection are gaining rights regardless of not being employees. The case has highlighted the need for employers to be keen in making sure that they fully understand the employment status of the people who are under their employ. Further classification needs to be made on individuals who are termed as self-employed contractors not just through terminology. This is because the Employment tribunal will keenly analyses the terms of employment between the two parties in order to consider the actual nature of the relationship with a view of being able to determine the status of the worker. Claims of unlawful termination of work, unlawful deduction of wages, whistle blowing, unpaid leaves, discrimination by the employer can be investigated by the tribunal even in the presence of seemingly superior protection rights for employers at the expense of employees’ rights (Wolkinson 2007). As of 1st October, a guide for employers was initiated with the following requirements imposed on the largest employers:-compulsory minimum employer contributions in order to provide a minimum level of benefits to employees, re-enrolment of eligible employees who decide to leave work after a period of three years, enrolment of eligible and non-eligible employees who want to be employed into an automatic enrolment scheme, mandatory provision of information to their workers regarding their rights in the work place and ensuring that they take into account new case laws as part of their preparations for automatic enrolment. Failure to comply with the mandated requirements might lead to misdiagnosis of individuals of as self-employed excluding them from automatic enrolment. Such actions will risk fines and further action by the Pensions Regulator (Mediratta 2009). The need to classify who falls under the category of a worker for automatic enrolment was identified in order to aid both workers and employees. A worker is an individual who enters or works as an employee under a contract of employment or undertakes to perform services or do work personally for another individual who is not his client or customer under a contract. The rulings made in the case, Hospital Medical Group v Westwood (2012), have raised fresh debates on where to draw the line between a genuine self-employed contractor and an individual who is contracted to perform work personally as a worker. The case above highlighted how an individual was likely to be a worker if he did not promote himself and work independently even if he operates a business himself. Following the ruling by the Court of Appeal on the Westwood case, another case [Bates van Winkelhof v Clyde & Co LLP] threw doubt on the status of workers in a limited liability company. In the case, a former member of the law satisfied the conditions for classification of a worker as understood in the case law set by the Westwood case. The claimant was found not to be client or customer of the partnership of the law firm. She was entitled to the status of a worker but the tribunal’s decision to add that worker status is not reserved for full equity partners is bound to cause critical re-evaluations by partnerships. Readdressing the issue of automatic re-enrolment among senior ranking staff is bound to be key in their discussions. The two cases may be appealed in the future resulting in new case laws pertaining to the status of workers. Scrutiny of worker’s eligibility for automatic enrolment is necessary in the wake of recent decisions (Cushway 2013). As of 2013,the law has extended to cover general practitioners working under PMS/APMS contracts for cases where a protected disclosure is made which contradicts with earlier case law stipulating that only general practitioners with GMS contracts could be covered. It is also worth noting that Dr.Westwood’s would have likely gotten protection as a whistle blower even in his practice as a general practitioner. References Holland, James A., and Stuart Burnett. Employment Law. Oxford: Oxford UP, 2007. Print. Wolkinson, Benjamin W. Employment Law: The Workplace Rights of Employees and Employers. 2nd ed. Malden, MA: Blackwell Pub., 2008. Print. Mediratta, S. K. Handbook of Law, Women, and Employment: Policies, Issues, Legislation, and Case Law. New Delhi: Oxford UP, 2009. Print. Cushway, Barry, and Ian Hallsworth. The Employers Handbook 2012-13 an Essential Guide to Employment Law, Personnel Policies and Procedures. London: Kogan Page, 2012. Print. Macdonald, Lynda A. C. The Blackhall Guide to Employment Law in the UK. Dublin: Blackhall, 1999. Print Turner, Chris. Unlocking Employment Law. Hoboken: Taylor and Francis, 2013. Print. Read More