There has been a further crackdown on the ‘Gig Economy’ today as a key decision has been reached in the Supreme Court on workers’ rights in the Pimlico Plumbers case which we previously reported on here. The court has rejected Pimlico Plumber’s appeal and ruled in favour of Mr Smith concluding that he should be defined as a worker and should get basic employment rights.
Pimlico Plumbers Ltd and anor v Smith
A long awaited decision has been reached in a key case on the ‘Gig Economy’.
Mr Smith was a plumber who carried out work for Pimlico from August 2005 until April 2011, having suffered a heart attack in January 2011. He claimed that he was unfairly and wrongfully dismissed, not paid holiday pay, subjected to disability discrimination and that Pimlico made unlawful deductions from his wages.
The tribunal found that Mr Smith was a worker on the basis that:
- Contractual arrangements provided for Mr Smith to personally provide work for Pimlico.
- He was obliged to work a minimum number of hours per week on days agreed with Pimlico.
- He had to discuss and agree his working hours with Pimlico.
- He could not provide a substitute without permission from Pimlico.
- Pimlico exercised tight control on his ability to compete.
- Pimlico couldn’t ever be considered a client or customer of Mr Smith.
- Mr Smith was an integral part of Pimlico’s operations and he was subordinate to them. He was not in business on his own account.
The Employment Appeal Tribunal and then the Court of Appeal both upheld the decision of the Employment Tribunal. Pimlico Plumbers appealed to the Supreme Court.
The Supreme Court has dismissed the appeal ruling in favour of Mr Smith. It focused on key elements in the appeal, including the right to substitution and the ‘client or customer’ status of Pimlico Plumbers.
The Supreme Court found that the only right of substitution Mr Smith had was of another Pimlico Plumber operative. This is the opposite of a situation in which an employer is uninterested in the identity of the substitute as long as the job gets done. This meant that Pimlico Plumbers had placed a limited right of substitution on Mr Smith and there was an obligation for services to be performed personally.
The Supreme Court also found that Pimlico Plumbers did not have the status of a client or customer of Mr Smith’s. The requirement for Mr Smith to wear a branded uniform, drive a branded van, carry an identity card and closely follow administrative instructions and severe payment terms prevented Pimlico Plumbers from having this status. Pimlico Plumbers had also included references in the contract to ‘wages’, ‘gross misconduct’ ‘dismissal’ and attempted to implement restrictive covenants following Mr Smith’s termination. The Supreme Court held that the tribunal was entitled to find that Mr Smith was a worker by a ‘reasonable margin’.
This is undoubtedly a long awaited and important decision on employment status however, it still does not clarify the law in this area and it is likely that future claims will be considered on a case by case basis. Charlie Mullins, the CEO and founder of Pimlico Plumbers has provided some interesting commentary on the case from an employer’s perspective in his blog.
One of the main conclusions of this case was that Pimlico Plumbers had choreographed its documents to ‘exert a substantial measure of control’ over its workforce. If your business has relationships with ‘self-employed’ contractors who provide services only to your business and do so on a regular basis, it may be worthwhile reviewing the arrangements that are in place to check their actual status. It is also worthwhile conducting an audit of all persons providing services to your business who are not employees to ensure that appropriate contractual arrangements are in place and to assess the risks if any such relationships pose in the future.
If you require advice on employment status or have any other HR queries please do not hesitate to contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524 548494.