The Supreme Court have ruled on the highly-anticipated appeal of Gary Smith v Pimlico Plumbers , finding that a former contractor was in fact ‘a worker’, and should therefore be entitled to holiday pay and other basic worker’s rights.
The appeal to the Supreme Court was brought by Gary Smith, a heating engineer, who had worked for Pimlico Plumbers for six years until 2011, when he suffered a heart attack. Mr Smith claimed that his subsequent request for a 3 day week was rejected and the van that he rented from the company was taken away.
He was later dismissed and brought employment tribunal claims for unfair dismissal, entitlement to pay during medical suspension, holiday pay, unlawful deductions from wages and disability discrimination. The tribunal were asked to consider Mr Smith’s employment status as a preliminary issue.
Mr Smith’s contractual documentation stated that he was an independent contractor of Pimlico Plumbers. He was under no obligation to accept any work from the company and in return, they were not obliged to offer him any work. However, there was a separate provision in the Company Manual, stating that Mr Smith should complete a minimum of 40 hours a week. Mr Smith also bore a considerable degree of commercial risk and was liable for any non-payment of services provided. Whilst he had to provide his own materials and tools, he was required to drive a Pimlico Plumber’s branded van (with a tracker installed), wear a company uniform and carry an identity card.
An Employment Tribunal held that Mr Smith was ‘a worker’ and the matter was subsequently appealed to the EAT and Court of Appeal before reaching the Supreme Court earlier this year.
The Supreme Court upheld the Court of Appeal’s earlier decision, finding Mr Smith to be ‘a worker’. It found that whilst Mr Smith’s employment contract did provide him with elements of operational and financial independence, his services to Pimlico’s customers were ultimately marketed through the company.
Delivering the judgment, Lord Wilson stated that Mr Smith’s contract “enabled the company to exercise tight administrative control over him during his periods of work for it; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.”
The Court also held that whilst some elements of Mr Smith’s conditions with Pimlico Plumbers resembled self-employment, overall the conditions contained with his contract “betrayed a grip on his economy inconsistent with him being a truly independent contractor.”
This the latest in a long line of legal challenges on employment status and is likely to set a significant precedent for a series of protracted and high-profile ‘gig economy’ cases, including that of Uber and Deliveroo.
It is now evident that simply labelling a worker as ‘self-employed’ will not guarantee the corresponding legal status. Instead, companies must be careful to assess the exact nature of the relationship, the obligation between the parties and the degree of bargaining power when determining the rights of workers.
Organisations across all sectors should be aware that the debate on employment status remains a hot topic, the ramifications of these cases will not be limited to those within the ‘gig economy’ and indeed, Parliament is in the process of consulting on draft legislation on the issue. It is hoped that any legislative reform in this area will provide a degree of clarity on the issue, which has been somewhat lacking to date.
Niall McMullan is an Associate Partner in Worthingtons Commercial Solicitors, Belfast, who regularly advises organisations on employment law issues including employment status and contractual arrangements and can be contacted on 028 90 434015 or email email@example.com