PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
There have been a number of recent cases looking at the precise employment status of those working for employers who like their operatives to appear to clients as their representatives but who operate a model of self-employment. One such ‘gig economy’ case (Pimlico Plumbers Limited and Another v Smith) was recently decided by the Supreme Court, which ruled that a plumber who had worked for Pimlico Plumbers Limited for six years was entitled to workers’ rights.
Mr Smith was one of a bank of plumbers who provided their services to Pimlico Plumbers Limited under written agreements which stated in clear terms that they were in business on their own account and responsible for paying their own Income Tax and National Insurance Contributions. However, they were required to work a minimum number of hours a week and had to wear uniforms, drive vans and carry identity cards that bore the company’s logo.
Pimlico Plumbers could monitor the movement of its operatives via GPS fitted in their vans and they were required to liaise with the company regarding any holiday leave or time off work. If a plumber did not wish to undertake a particular job, they had a limited facility to substitute another Pimlico Plumbers operative to perform the task, although this was not included in the written agreements under which they worked.
Mr Smith launched Employment Tribunal (ET) proceedings claiming, amongst other things, that he was unlawfully and unfairly dismissed after he suffered a heart attack. In the circumstances, a preliminary issue arose as to the basis on which he performed work on Pimlico Plumbers’ behalf.
The ET declined jurisdiction to hear Mr Smith’s unfair dismissal complaint on the basis that he was not an employee. However, the ET found that, rather than being self-employed as the company claimed, he was a worker within the meaning of Section 230(3) of the Employment Rights Act 1996, Regulation 2(1) of the Working Time Regulations 1998 and Section 83(2) of the Equality Act 2010. He was therefore entitled to proceed with claims that unlawful deductions had been made from his wages, that he had been unlawfully denied holiday pay and that he had suffered disability discrimination. The ET’s ruling was subsequently upheld by the Employment Appeal Tribunal and the Court of Appeal.
In dismissing Pimlico Plumbers’ appeal against the latter ruling, the Supreme Court noted that the right of substitution was limited by the fact that Mr Smith had to choose another plumber from the company’s bank to replace him. Although the terms of his written agreement with the company were somewhat confusing, it was clear that its dominant feature was his obligation to personally perform services.
Also rejecting arguments that the company could be regarded as Mr Smith’s client or customer, the Court noted that the contract cast certain obligations upon him even when he was not on an assignment. The company retained tight control over his attire and the administrative aspects of any job he performed. The contract also dictated terms as to when, and how much, he was to be paid and imposed a number of covenants restricting his working activities post termination.
Mr Smith is therefore entitled to workers’ rights and can now proceed with his ET claims.
Cases on this topic show that the courts frown on arrangements that seek to deprive staff of the rights conferred by employee or worker status and will seek out the reality of the working relationship. We can advise you on your individual circumstances.