Following appeals in the Employment Appeal Tribunal and the Court of Appeal, the Supreme Court recently made a final judgment in the case of Pimlico Plumbers v Smith. Their decision to dismiss the appeal has now been regarded as one of the most significant in years.
In unanimously dismissing the appeal, the five judges sitting at the Supreme Court held that Gary Smith, a former engineer, was a worker and not self-employed.
Mr Smith had worked for Pimlico Plumbers - based in London - from August 2005 until April 2011. He suffered a heart attack and subsequently requested a cut in his working hours, from five days a week to three days. Pimlico Plumbers did not accede to his request and took back the company-branded van he had been allocated for work.
In order to be classed as a worker, Gary Smith had to show that he was obliged to personally carry out his work for Pimlico Plumbers and that the nature of their contract meant that Pimlico Plumbers was not his client or customer.
The Supreme Court concluded that Gary Smith was a worker as his contract with the company had put emphasis on the obligations he had to carry out the work personally and the requirement to maintain a certain appearance. This suggested that the business exercised a high level of control - which would not have been appropriate if they were his customer or client. He had to use their branded van, wear uniform, be available for 40 hours work per week and sign restrictions regarding his work after leaving Pimlico.
As a result of the decision by the Supreme Court, there have been intensified demands for clearer gig economy laws.
Some employers carefully design their arrangements to give their customers the impression that persons working for them are part of their workforce - whilst giving the staff the impression that they are self-employed - and at present, there appears to be a trend towards courts being unsympathetic towards these arrangements.
The TUC called on the government to bring in better regulations and TUC General Secretary Frances O’Grady said:
“People shouldn't have to go to court to get a fair deal at work. Companies that treat their staff like disposable labour must be brought to book.”
Director of Policy at IPSE - which represents self-employed persons - Simon McVicker said:
“The best way to address this legal uncertainty is to write into a law a positive definition of what constitutes self-employment. This would send a clear signal about who is and who isn’t self-employed, and would mean that people wouldn’t have to go all the way to the Supreme Court to get a resolution.”
Andrew Willis, Head of Legal at CIPD HR-inform stated:
“While the legal provisions examined in this case have been in place for many years, recent cases have changed our understanding of how they should be interpreted and organisations will need to exercise caution in the arrangement they agree, and then follow in practice, with those they wish to engage as genuinely independent contractors.”
Founder of Pimlico Plumbers Charlie Mullins has written in People Management:
“.......We do, however, need a law change to give businesses and their contractors a sense of certainty. God knows, with the mess that is Brexit, there’s enough business uncertainty around at the moment.
It cannot continue to be the case that a plumber, earning a six-figure salary for his or her labour, who is making a profit on materials, while claiming tax advantages of being self-employed, can demand benefits as if they were a PAYE tax-paying employee.
The 21st century UK working landscape has been transformed, sometimes for the better, and sometimes – as in the case of zero hour contracts – for the worse. In 2008, there were 3.8 million contractors in the UK economy. That figure rose to 4.6 million by 2015. This is not a passing fad, and many of these contractors have a single source of income. What we need now is for employment law to catch up with employment.”
