In a case that has been running for six years, and attracted a great deal of media attention, the Supreme Court has upheld rulings made by lower courts on the employment status of Gary Smith, who worked as a plumber for Pimlico Plumbers for six years before he suffered a heart attack and while taking time off to recover had his contract terminated.
The Supreme Court has upheld decisions of the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal, which determined that Mr Smith was a worker and not, as Pimlico Plumbers contended, self-employed in business on his own account.
Mr Smith’s employment status (as a worker) means he can proceed with his claims for disability discrimination, holiday pay and unauthorised deductions from wages.
Although the outcome of this case is fact sensitive, the decision is significant for those circa one million people working in the so-called gig economy, particularly because a decision of the Supreme Court is binding on lower courts. The gig economy, in which most individuals are engaged on a self-employed basis to perform a series of separate jobs without the same employment protections as employees or workers (including the right to be paid the national minimum wage), has been criticised as a form of exploitation by big businesses.
The outcome in the Pimlico Plumbers case follows the trend in a series of similar cases dealing with the theme of employment status in the gig economy. Save for the Central Arbitration Committee holding that Deliveroo drivers are self-employed contractors (a decision that is being appealed), the courts have continued to find that those working for companies in the gig economy are workers, entitling them to a multitude of statutory employment protections.
Determining who is a worker and who is self-employed can be tricky and will depend on the facts. The complexity in distinguishing between these two groups is principally the reason that this case has progressed all the way to the Supreme Court. Broadly speaking, there are three types of employment status: employee, self-employed contractor and, filling the gap between the two, worker.
On the face of it, it would appear that Mr Smith provided his services as a plumber as a self-employed contractor. He did not need to commit to working on any given day and Pimlico Plumbers would not offer him work if there was none. His written contract said he was self-employed, he managed his own tax affairs and submitted invoices for his work (and benefitted from the tax advantages as a self-employed person). Unlike many working in the gig economy, Mr Smith earned far in excess of the national minimum wage.
However, the Supreme Court, echoing the judgment of the Court of Appeal, held that critical to their finding that Mr Smith was a worker was the fact that:
- He was required to perform his work personally. His only right of substitution was of another plumber working for Pimlico Plumbers and engaged under the same contract with the same restrictions; and
- Pimlico Plumbers was not Mr Smith’s client or customer. In fact, Pimlico Plumbers exerted significant control over Mr Smith during the term of the agreement: he had to wear a Pimlico Plumber’s uniform and drive a van displaying the company logo. Mr Smith was also subject to the control of Pimlico Plumbers after his agreement was terminated in the form of onerous post-termination restrictions that prevented him from working as a plumber in London for three months.
Any company operating in the gig economy needs to invest the time (and take legal advice) in understanding the true status of their workforce. The extensive media coverage that this and related cases have received will result in gig economy workers being more alive to their employment rights. If companies operating in the gig economy fail to offer staff employment protections to which workers are entitled they will run the risk of being the subject of complaints from staff and potentially litigation in the employment tribunals and courts.
You can find further information regarding our expertise, experience and team on our Employment pages.