Pimlico Plumbers Case

The Supreme Court recently reached a decision in the long-running saga of the Pimlico Plumbers case. The judgment, which dismissed an appeal from Pimlico Plumbers Ltd and held that the Respondent Gary Smith was indeed a “worker”, has been held up as a significant blow to “gig economy” companies (such as Uber and Deliveroo) who purport to be a platform for self-employed contractors rather than employers.

Whilst the judgment is specific to the facts of the case, it will almost certainly prove instructive and be relied upon by individuals in many later similar cases.

Background

Smith, a plumbing and heating engineer, had worked for Pimlico, a plumbing business, as a “self employed” contractor under two successive contracts between 2005 and 2011. After falling ill, Smith issued proceedings before the employment tribunal alleging that Pimlico Plumbers were responsible for his unfair dismissal, unlawful deduction from his wages, failure to pay him statutory annual leave, and discrimination against him by virtue of his disability.

The employment tribunal held that, whilst Smith had not been an employee (and therefore could not complain of unfair dismissal) he was a ‘worker’ and could therefore proceed with his other complaints. The Employment Appeal Tribunal and the Court of Appeal upheld these rulings and Pimlico appealed to the Supreme Court.

Decision

The Supreme Court dismissed Pimlico’s appeal. Several points in the judgment should be emphasised:

The court examined the definition of ‘worker’ as provided for in the legislation. . The meaning in regulation 2(1) of The Working Time Regulations is identical to that in s.230(3)(b) of the Employment Rights Act. Likewise, confirming past case law, the court held that the meaning of ‘employment’ in s.83(2) of the Equality Act also meant the same.

The test for qualifying as a ‘limb (b)’ worker under s.230(3)(b) has two necessary components:

(i) The individual (Smith) must have undertaken to perform the relevant work personally.

(ii) The other party to the contract (Pimlico) must not have been a ‘client’ or ‘contractor’.

Regarding the first point, the court acknowledged Pimlico’s argument that Smith had been able (in limited circumstances) to appoint another Pimlico operative to do a job he had quoted. However, this did not change the fact that personal performance was the dominant feature of the contract. The language of the contract made reference to, for instance, “your [Smith’s] skills”. Further, Smith could only substitute work to other Pimlico operatives.

There is no clear definition of ‘client’ or ‘customer’ in the legislation. As such, a general assessment of the relationship between the parties is needed in worker status cases. Smith could reject particular offers of work and could accept outside work (if he had no offers from Pimlico clients). He also bore some personal financial risk and the manner in which he undertook work was unsupervised. However, Pimlico had tight control over his attire (he wore a Pimlico uniform) and the administrative aspects of the work. Likewise, Pimlico imposed ‘severe’ terms regarding when and how much it paid Smith and he was also required to work 40 hours per week. Similarly harsh restrictive covenants were imposed following his termination.

The (much publicised) fact that Smith was ‘self-employed’ for tax purposes was not relevant to whether he had worker status. Employment status in tax law (where you are either self-employed or employed) is not the same as employment status in employment law (where you can be either self-employed, a worker, or an employee). HMRC has set up a dedicated team to look into companies who are incorrectly classifying workers as self employed and if they find this to be the case, these companies will have to account to HMRC for the unpaid tax and national insurance in respect of these workers.

The government launched a consultation into the proposals put forward by the Taylor review, which included a proposal for a clearer definition of worker. The consultation closed earlier this month and we await much needed clarification in this area of law.