Determining your employment status is crucial for understanding your rights and obligations in the workplace. This blog will explore the three main employment statuses: employee, worker, and self-employed. We’ll discuss the legal tests used to determine each status, explain the overlap between these tests as highlighted in the Ter-Berg case, and provide an overview of the case itself and how it can help in determining one’s employment status.

Legal Tests for Employment Status

1. Employee

  • Definition: An employee working under a contract of employment, which includes personal service, control by the employer, and mutuality of obligation. (Note, a contract need not be in writing.)
  • Pros and Cons: Employees enjoy extensive legal protections such as compensation for unfair dismissal, redundancy pay, and statutory sick pay. Employees generally have more job security but often have less flexibility and higher tax deductions.
  • Legal Tests:
    • Personal Service: The individual must perform the work themselves. (i.e. If you must do the work yourself and can’t send someone else, this indicates personal service.)
    • Control: The employer controls how, when, and where the work is done.
    • Mutuality of Obligation: Both parties have obligations to each other. (i.e. If your employer is obligated to provide work and you are obligated to accept it, this mutual obligation points to employee status.)

2. Worker

  • Definition: A worker performs work personally for another party under a contract, but not as part of their own business.
  • Pros and Cons: Workers have basic protections like minimum wage and holiday pay, and often more flexibility, but fewer benefits and less job security compared to employees.
  • Legal Tests:
    • Personal Service: The individual must perform the work themselves, with limited rights to send a substitute. (i.e. If you can only send a substitute when you are unable to work, this supports the that personal service element remains.)
    • Not in Business on Own Account: The individual is not running their own business.

3. Self-Employed

  • Definition: A self-employed person runs their own business and provides services to clients or customers.
  • Pros and Cons: They have full control over their work and potential tax benefits, but no employment rights and greater financial risk.
  • Legal Tests:
    • Control: The individual has control over how, when, and where the work is done.
    • Financial Risk: The individual bears the financial risk of the business.
    • Provision of Equipment: The individual provides their own tools and equipment.

Overview of Ter-Berg v Malde Case

Background:

The case of Ter-Berg v Malde and another [2025] EAT 23 highlights the complexities of determining employment status. In this case, a dentist, sold his dental practice to a company and then entered into an agreement with the company to provide dental services. Some time, later the dentist then claimed unfair dismissal and holiday pay through an Employment Tribunal on the basis that he was either a worker or an employee.
There were 2 key clauses in his agreement that affected how the case progressed:

  1. Firstly, his agreement with the company had a clause explicitly ruling out an employment relationship between them.
  2. Secondly, there was a substitution clause that stated that the dentist was required to source a locum if he did not use the dental facilities due to illness or other reasons for more than 20 days continuously.

First Tribunal

In the first instance a tribunal found that the dentist was not an employee as he did not meet the 3-part test of personal service, control and mutual obligation.

Appeal 1

The dentist appealed and a preliminary hearing found again that he was not an employee. However, in these findings the substitution clause was misinterpreted. As per the key findings in another case – Pimlico Plumbers Ltd v Smith – a conditional substitution right (i.e. if you are allowed to find a substitute when you are ill/can’t work) does still support the concept of personal service. Whereas a right to provide a substitute in any circumstance suggests the personal service condition is NOT met.

Appeal 2

Therefore, the dentist appealed again and was granted a new employment tribunal so that the matter could be heard again without a misinterpretation. The dentist however would again be disappointed as it was found that he was not an employee due to the ‘exceptional facts’ as the intention of the parties was that there was no employment relationship as set out in their agreement terms.

A further tribunal was then held to decide whether the dentist qualified as a worker instead of as an employee. The Tribunal decided that he was not a worker either, citing that finding him to be a worker would be inconsistent with their decision finding him not to be an employee. Again, the dentist appealed.

Appeal 3

In this final judgement, the judge noted that the way that the previous tribunals dealt with whether the dentist was an employee or a worker separately was unfortunate due to the overlapping nature of the tests for determining these two employment statuses.

The judge again noted that the tribunal had mistakenly dealt with the issue of personal service and that the concept of personal service for the ‘worker’ definition was in fact met in this situation.

Further, the judge noted that the although the tribunal’s decision that the element of control was not satisfied either was relevant to the case in general, it was not conclusive in proving that the dentist failed to qualify as a worker. There is a lower threshold to qualify as a worker than there is to qualify as an employee. Therefore, the tribunal was incorrect in finding against the dentist being a worker purely because it would be inconsistent with also finding that he was not an employee, since there is a lower threshold to qualify as a worker.

The judge clarified that it was also incorrect to conclude that the parties merely intending the relationship to be that of the dentist providing services to the company as a self-employed contractor automatically meant that he was not a worker. Using terminology such as independent contractor should be considered by a tribunal but are not deterministic of employment status.

Therefore, the judge stated that where the status of employee and worker are both relevant, they should be assessed in conjunction but with regard to the lower threshold required to qualify as a worker.

The matter will now progress to another new tribunal to assess whether the company was a client/customer of the dentist’s own business to decide finally whether or not he qualifies as a worker.

Conclusion

Determining employment status is not an easy feat, so much so that even tribunals can make erroneous decisions. This leads to increased costs and wasted time for employers, employees and the courts alike. It is important to consider all the relevant factors that influence someone’s employment status and determine what is the reality of the situation with regard to all the facts and the legal tests.

Farleys Solicitors specialise in employment law & HR for businesses and employees. If you or your business requires HR & employment law advice and support in relation to any of the matters mentioned above, please contact us on 0845 287 0939 or contact us by email.