Supreme Court Rejects Pimlico Plumbers' Appeal in Employment Status Case

There have been a number of recent cases looking at the precise nature of the 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) has now been decided by the Supreme Court, which has ruled that a plumber who had worked for Pimlico Plumbers Limited for six years was entitled to workers' rights.

Pimlico Plumbers Limited used operatives to supply services to householders on its behalf. Amongst other requirements, they had to work a five-day, 40-hour week and to be on call at all times during their shifts. They also had to wear uniforms, drive vans, carry identity cards that bore the company's logo and conform with personal conduct guidelines. 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.

On the other hand, the operatives had to pay rent on their vehicles and provide all their own tools, equipment and materials. They had to arrange their own professional indemnity insurance cover and their contracts with the company 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.

One of the operatives, Gary Smith, had worked for Pimlico Plumbers for six years before he 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 the company's behalf.

The ET found that Mr Smith was a worker within the meaning of the Employment Rights Act 1996 (ERA). Although he was not an employee in the ordinary sense, his working arrangements met the definition of employment within the ERA, which defines a worker as an individual who has entered into or works under a contract of employment or any other contract whereby they undertake 'to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual'. The ruling meant that the ET had no jurisdiction to entertain his unfair and wrongful dismissal claims. It was, however, able to consider his complaints of direct disability discrimination, failure to make reasonable adjustments, underpayment of holiday pay and unauthorised deductions from wages. The ET's decision was subsequently upheld by the Employment Appeal Tribunal and the Court of Appeal.

In dismissing Pimlico Plumbers' challenge to that result, the Supreme Court could find no flaw in the ET's conclusion that Mr Smith's relationship with the company was not that between an independent contractor and his customer or client, but rather that of a worker. He is therefore entitled to employment rights, such as holiday and sick pay, and can now proceed with his ET claims.

Commenting on the decision, TUC General Secretary Frances O'Grady said, "This case has exposed how widely sham self-employment has spread. Bad employers are using every trick in the book to deny staff basic rights.

"It's time to end the Wild West in the gig economy. The Government must get tough on rogue bosses and give unions the right to organise in more workplaces."

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These cases show that the courts frown upon 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 any contractual matter.
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