InsightsInsight - Employment & HR - POSTED: June 15 2018
Supreme Court decision on worker status
The much anticipated Supreme Court judgement was handed down on Wednesday in the case of Pimlico Plumbers v Smith, concluding Mr Smith was a “worker” for the purposes of the Employment Rights Act 1996.
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Mr Smith had worked for Pimlico Plumbers for six years and was engaged as an independent contractor. During this time, he had entered into two agreements with the company which set out that the company was not obliged to offer him work, and he was not obliged to accept it.
The company manual stated that Mr Smith was required to wear a Pimlico Plumbers uniform, carry a company ID card, use a company mobile phone and hire a company van when he was carrying out his work. He was expected to work 40 hours per week over 5 days.
His contract had no express right for Mr Smith to use a substitute, although in practice he could send another company plumber in his place if he couldn’t attend a job.
Mr Smith brought claims in the Employment Tribunal back in 2011 for unfair dismissal, unlawful deductions from wages, unpaid annual leave and disability discrimination. His employment status was therefore vital to determine which of those claims could continue. The Tribunal reached the conclusion he was not an employee (and therefore could not claim unfair dismissal) but that he was “in employment” for the purposes of his discrimination claim under the Equality Act 2010, and a worker for his unlawful deduction from wages and unpaid leave claims.
Pimlico Plumbers appealed, and the EAT and Court of Appeal both upheld the Tribunal’s decision.
When reaching its decision that Mr Smith was a worker, the Supreme Court looked at whether he had undertaken to personally perform work for the company and whether he was in business on his own account with Pimlico Plumbers being his customer or client.
Mr Smith’s contract required him to perform the work himself – he did not have an unfettered right to give away the work. Although he could send another plumber from the company to carry out a job for him, this was not set out in his contract and the substitute plumber had to come from the company’s ranks. Although Mr Smith could reject work and took on some degree of financial risk, the fact that the company controlled his uniform, van and administrative duties all pointed away from Pimlico Plumbers being a client of Mr Smith.
This case looked very much at the individual facts, and therefore does not change the existing case law or add any new principles around worker status. This will, however, be seen as a blow for the gig economy and companies will need to examine their existing arrangements to determine whether they might be at risk of challenge from individuals over employment status. The abolition of Employment Tribunal fees only increases this risk.
Do not hesitate to contact our Employment Team for advice regarding employment status or contractual arrangements.
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