Lessons for Dental Practice Owners from Ter-Berg v Malde & Anor

The Importance of Employment Contracts

Author: Ben Edwards

Key contact: Juliette Franklin

In this article, we'll examine the importance of employment contracts and draw out lessons for dental practice owners from Ter-Berg v Malde & Anor. We’ll also provide practical tips for dental practice owners to consider when managing employment contracts.

In the case of Ter-Berg v Malde & Anor [2025] EAT 23, the Employment Appeal Tribunal (EAT) delivered a significant judgment concerning the employment status of a dentist. The case has important implications for dental practice owners, particularly regarding the classification of workers and the legal risks involved in employment contracts.

Case summary: Ter-Berg v Malde & Anor

Having sold his dental business to Simply Smile Manor House Ltd in April 2013, Dr. Mark Ter-Berg entered into an “Associate Agreement”, which provided that “nothing in this agreement shall constitute a contract of employment”. Dr. Ter-Berg accepted that when he was initially engaged by SSMH Ltd, the parties’ intentions were that he would not be an employee. However, Dr. Ter-Berg argued that by the time of the termination of the relationship, his status had changed to that of an employee as defined in section 230(1) of the Employment Rights Act 1996 (ERA) or, alternatively, a worker as defined in section 230(3) ERA. As such, Dr. Ter-Berg brought employment tribunal proceedings against SSMH Ltd and both directors in November 2018.

The Employment Tribunal (Tribunal) initially held that Dr. Ter-Berg was not an employee, primarily because it considered the substitution clause, which allowed Dr. Ter-Berg to provide a substitute only after 20 days of illness, was inconsistent with employment status. The Tribunal also applied a rigid interpretation of mutuality of obligation, concluding there was insufficient evidence to establish an employment relationship.

Dr. Ter-Berg appealed the Tribunal’s decision, and the EAT found errors in the Tribunal's analysis. The EAT concluded that the Tribunal had misinterpreted the substitution clause, which was not as flexible as initially believed. Despite the EAT finding that Dr. Ter-Berg was not an employee as it considered that the “irreducible minimum” test was not met, the EAT confirmed that the Tribunal was incorrect in automatically precluding the conclusion that Dr. Ter-Berg was a worker. As no other contradiction of personal service was identified in the facts of the case, the Tribunal should have concluded that the personal service element of the definition of a worker was met in this case.

Key lessons for dental practice owners

This case offers important lessons for dental practice owners, particularly in relation to worker classification and contract drafting. Here are some practical tips to ensure compliance and avoid costly legal disputes:

1. Understand the importance of employment status

In the UK, the distinction between employees, workers, and independent contractors is crucial, as each category comes with different legal rights and obligations. In Ter-Berg v Malde & Anor, the dispute arose over whether Dr. Ter-Berg was a worker or an independent contractor. The distinction can affect pay, benefits, tax obligations, and employment protections, so it’s essential to clearly define the relationship in the contract.

Acuity top tip

Carefully consider the nature of your working relationships. If you want a dentist to be classified as an independent contractor, make sure not only that the contract appropriately reflects this, but also ensure that, in practice, you treat your independent contractors consistently with the terms of their contract and in accordance with those terms that apply to independent contractors (e.g., providing their own tools and having the freedom to work for others). In short, do not create a situation whereby the contract says one thing, but you do another.

2. Review substitution clauses carefully

In this case, the Tribunal placed significant emphasis on the substitution clause in Dr. Ter-Berg's contract. A substitution clause allows workers to send a replacement if they are unable to perform the duties due to illness or other reasons. However, the Tribunal misinterpreted the clause's flexibility, affecting its interpretation of the working relationship.

Acuity top tip

When drafting contracts, ensure substitution clauses are clearly worded and aligned with the nature of the work relationship. Be aware that a substitution clause can influence whether someone is considered a worker or an independent contractor. If a substitution option exists, ensure it is realistic and consistent with the practice’s operational needs.

3. Examine mutuality of obligation

Mutuality of obligation refers to the understanding that one party (the employer) is required to provide work, and the other party (the worker) is required to carry out the work. In this case, the Tribunal failed to properly analyse the mutuality of obligation between Dr. Ter-Berg and the practice. This concept is critical in determining whether there is a formal employment relationship.

Acuity top tip

Carefully evaluate mutuality of obligation in your practice. If you are offering work with no guarantee of future shifts or duties and no expectation to undertake the work if it is offered, it could suggest an independent contractor relationship rather than an employment relationship. However, if there is a regular expectation that work will be provided, and, if offered, that the individual will undertake it, it may indicate the person is in reality an employee or worker. Make sure to address mutuality of obligation in your contracts and practices.

4. Consider all relevant circumstances

The EAT emphasised that tribunals should not rely solely on written contracts when determining employment status. All the circumstances surrounding the relationship, such as the actual nature of the working relationship, the level of control, and the degree of integration into the practice, should be considered.

Acuity top tip

Look beyond the contract. Ensure that the actual working practices align with the classification of employment. If you are treating someone as a contractor, ensure that their work arrangement reflects the freedom and independence that contractors usually enjoy, such as the ability to refuse work or work for other practices.

5. Get professional legal advice

Given the complexities involved in employment law, it is always wise for dental practice owners to seek professional legal advice when drafting contracts or managing staff. Employment law is constantly evolving, and staying compliant can prevent costly disputes and potential claims.

Acuity top tip

Consult with employment law experts to ensure your contracts and practices align with current regulations and case law. Regularly update contracts and policies to reflect changes in the law and to ensure clear, enforceable terms. Be aware that it is not a case of “one size fits all”; contracts should be tailored to the individual circumstance and be kept under review to ensure that any developments in the law are adequately and appropriately incorporated.

Conclusion

The main lessons for dental practice Owners from Ter-Berg v Malde & Anor include a reminder about the importance of clear contracts - and the need to consider all relevant factors and circumstances beyond the written contract to determine employment status. By understanding the nuances of employment relationships and carefully drafting contracts, dental practice owners can reduce legal risks and create a more transparent and fair working environment for their staff.

We at Acuity Law have a dedicated dental team, supported by our specialist employment lawyers. We can assist you with any concerns or queries you may have in respect of the status of your staff. Feel free to reach out to our Healthcare team for more information.