Sejpal v Rodericks Dental Ltd

Sejpal v Rodericks Dental Ltd [2022] I.C.R. 1339

Facts

The claimant, Mrs N Sejpal, a dentist, worked under an "associate contract" with the respondent, Rodericks Dental Ltd, a company operating over 100 dental practices. Her final contract was dated 20 January 2013. When her contract was terminated in December 2018 while she was on maternity leave, Mrs Sejpal brought a claim of discrimination on the grounds of pregnancy or maternity. She also brought other claims that required her to be a "worker".

At a preliminary hearing, the Employment Tribunal (ET) found that the associate contract was drafted in terms of self-employment, lacked the requisite mutuality of obligation to establish worker status, and provided the claimant with a clear and genuine right to substitute a locum. This meant, in the ET's view, that she did not undertake to provide her services personally. Consequently, the ET dismissed her claim, concluding she was not a "worker" under section 230(3)(b) of the Employment Rights Act 1996 or section 83(2) of the Equality Act 2010.

Held

The Employment Appeal Tribunal (EAT) allowed the claimant's appeal, finding that the ET had made several substantive errors of law. The EAT held that:

Approach to Contractual Terms

The ET erred by giving primacy to the wording of the contract unless it was a "sham" in the sense of traditional English contract law. The EAT reiterated that, in employment cases, tribunals must determine the "true nature of the agreement" and apply the statutory test according to its purpose, without excessive focus on wording designed to avoid worker status.

Mutuality of Obligation

The ET incorrectly found a lack of "mutuality of obligation". The EAT clarified that this concept primarily relates to whether a contract exists at all, and in this case, there was no dispute that the claimant had entered into an associate contract. Therefore, the concept of an "irreducible minimum of mutual obligation" was not significant.

Personal Service and Substitution

The ET erred in concluding that there was an "unfettered right of substitution". Clause 30 of the contract required the associate to use "best endeavours" to arrange a locum if absent for more than 14 days, and crucially, the locum had to be "acceptable to the primary care trust and the company". The EAT found that this limited the right of substitution, both contractually and in practical application. The EAT stated that the ET should have considered adequately whether the claimant was required to provide some personal service to the respondent based on a realistic assessment of the actual agreement.

Profession/Business Undertaking and Client/Customer

The ET failed to properly consider whether the claimant carried on a profession or business undertaking, and whether the respondent was a client or customer of the claimant's business, which is a necessary component for exclusion from worker status.

EAT

The EAT, applying the principles from Autoclenz Ltd v Belcher and Uber BV v Aslam, substituted a determination that the claimant had entered into a contract whereby she agreed to provide "some personal work or services" for the respondent. The remaining questions – whether she carried on a profession or business undertaking, and whether the respondent was a client or customer – were remitted to a different employment tribunal for reconsideration due to the fundamental errors made by the original ET.

Comment

The Sejpal v Rodericks Dental Ltd judgment from the Employment Appeal Tribunal is significant for its reaffirmation of the "reality of the situation" approach in determining worker status, building upon the Supreme Court's decisions in Autoclenz Ltd v Belcher and Uber BV v Aslam. Key commentary points include:

Purposive Approach to Legislation

The EAT underscored that the determination of worker status is primarily a matter of statutory interpretation, focusing on the purpose of the protective legislation, rather than a strict application of common law contractual principles. This means courts must be "realistic and worldly-wise" when assessing allegations that a written contract does not reflect the actual terms agreed, particularly given potential imbalances in bargaining power.

Mutuality of Obligation Reclarified

The decision re-emphasises that "mutuality of obligation" is fundamental to the existence of any contract. However, when a single, ongoing contract is evident, the concept of an "irreducible minimum" (often associated with casual or "umbrella" contracts) is largely irrelevant to assessing worker status during periods of work.

Personal Performance and Substitution

The judgment provides further clarity on substitution clauses. An "unfettered right to substitute" is inconsistent with personal performance, but a conditional right may not be. The EAT highlighted that conditions such as requiring the substitute to be "acceptable to the company" and compliance with regulatory requirements are crucial fetters that tribunals must consider in assessing the "true agreement" and whether personal service is the "predominant purpose". It specifically rejected the notion that regulatory requirements automatically negate personal service.

Beyond Contractual Labels

The EAT strongly criticised the ET for rigidly adhering to the contract's wording and requiring proof of a "sham," "misrepresentation," or lack of "capacity" to disregard terms. This reinforces that tribunals must look beyond labels (e.g., "self-employed," "contract for services") to the operational reality of the relationship, in line with the Supreme Court's guidance.

Comprehensive Statutory Test

The case emphasises the importance of a structured application of the statutory test for worker status, which involves identifying the contract, assessing personal performance, and then determining whether the individual carries on a profession or business where the other party is a "client or customer". Being "self-employed" is not sufficient to be excluded from worker status; the "client or customer" limb must also be satisfied.

Rejection of Precedent

The EAT explicitly stated that it was not bound by and would not follow an earlier Employment Appeal Tribunal decision (Community Dental Centres Ltd v Sultan-Darmon), noting that worker status assessment is fact-specific and that Supreme Court decisions have fundamentally shifted the analytical focus away from mere contractual construction.