Legal Corner: Plumber found to be a worker and not self-employed

29th Jun 2018

As the employment landscape has evolved, the law has had to deal with different types of employment relationships. New styles of working have required the law to be interpreted in different ways. Just as we went to press this month, the long-awaited Supreme Court decision in Pimlico Plumbers Ltd v Smith [2018] UKSC 29 was handed down.

Mr Smith was a plumbing and heating engineer who did work for Pimlico Plumbers Ltd between 2005 and 2011. In 2011, he had brought a claim in the employment tribunal alleging that he was either an employee (and claiming that he had been unfairly dismissed) or that he was a worker (and claiming wages and holiday pay). Pimlico Plumbers asserted that Mr Smith was neither an employee nor a worker, and was in fact self-employed.

An employee benefits from the highest level of protection in the eyes of the law, most notably having the right (after two years continuous service) not to be unfairly dismissed. However, a worker also has certain rights, most notably the right to holiday and sick pay.

The Employment Tribunal found that Mr Smith was not an employee, but was a worker, and therefore some of his claims could proceed. However, Pimlico Plumbers appealed that decision but were unsuccessful in both the Employment Appeal Tribunal and the Court of Appeal. Their arguments did not find favour in the Supreme Court either.

There are two key requirements for the test of a worker to be met; the first of these is known as ‘personal service’; that is, that the person must (on the whole) perform the work offered to them themselves. In some instances, an organisation wishes for some work to be completed and contracts with an individual for the work to be done – however, they are not concerned whether the work is undertaken by the person they have contracted with themselves, or by someone else. Utilising the services of another person is known as ‘substitution’.

In Mr Smith’s case, the wording of the documents he signed referred to him specifically being required to undertake work. There was no express right in the agreement to appoint a substitute to perform work allocated to him. The evidence suggested he had a limited right to do this, for example, where he was offered more lucrative work elsewhere. However, in those circumstances, he did not have a free choice on who might undertake the work instead – he had to use another Pimlico operative. The judge in the employment tribunal had found that this practice was a means to distribute work amongst operatives, akin to employees swopping shifts. The Supreme Court did not disagree with this view and therefore held that this limited right to substitute was not inconsistent with his argument that he was under an obligation of personal performance.

The second requirement is that the other party to the contract must not have the status of client or customer. The Supreme Court looked in detail at the terms of the agreement between Mr Smith and Pimlico Plumbers. Whilst the terms made clear that Pimlico Plumbers was not required to offer work to Mr Smith, and he was not obliged to accept work, they also made clear that whilst working, Mr Smith was required to wear a uniform supplied by Pimlico Plumbers along with an ID card, and drive a van with their branding (into which they had put a tracker). The terms referred to working 40 hours per week over five days, and Mr Smith was required to follow the admin instructions of the control room. The terms referred to him being paid ‘wages’ (along with detailed terms of payment), and also referred to the potential to be dismissed for gross misconduct (a feature of an employment relationship). The Supreme Court questioned whether the reference to such issues amounted to ‘ill-considered lapses which shed light on its true nature’. They had no hesitation in stating that the employment judge had been perfectly entitled, on the evidence, to consider that Pimlico Plumbers was neither Mr Smith’s client nor his customer and that he was in reality, a worker.

This is a further blow to organisations operating within the gig economy who have attempted to minimise their own exposure and risk by passing that on to the people who work for them. Decisions in cases involving Deliveroo and Uber have already highlighted that the courts will not just look at the way that parties to a contract identify themselves (such as referring to operatives as being self-employed) but will actually look at the reality of the working arrangements. This is a step forward for those who undertake work in this environment, and whilst each case will turn on its own facts, many can take heart from the fact that they too may be entitled to additional benefits such as sickness and holiday pay – despite their agreements not conferring such benefits.

However, this is by no means the end of the story – this case did not deal with all the issues and different styles of working that appear within the gig economy – and it is likely that there will be further judicial scrutiny of such agreements in the future.

Safia Tharoo, Barrister, 42 Bedford Row, London

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