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Self-employed or a worker?

View profile for Laura Hill
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The Supreme Court has handed down its long awaited judgment in Pimlico Plumbers v Gary Smith in a case which has potentially huge ramifications for freelance workers and employment law generally.

Mr Smith brought several claims in the Employment Tribunal in 2011 against Pimlico Plumbers for unfair dismissal and discrimination (as well as claims in respect of unpaid holiday pay and unauthorised deductions from wages) on the basis that despite being called “self-employed” he was actually an employee and thus, is entitled to certain rights such as holiday and sick pay.

The Employment Tribunal initially found that Mr Smith was a worker (but not an employee) and as a result, was entitled to basic employment rights. Pimlico Plumbers appealed the decision through the Employment Appeals Tribunal (EAT), Court of Appeal and the case was finally heard in the Supreme Court to determine the status of Mr Smith.

 

Mr Smith

Mr Smith worked as a plumber for Pimlico Plumbers for six years with his title being a “self-employed operative”.  During his time with Pimlico, he:

  • was paid by Pimlico against receipt of an invoice;
  • had to provide his own tools, equipment and materials;
  • took personal liability for the work he carried out;
  • provided his own professional indemnity insurance;
  • was VAT registered;
  • did not have to accept work from Pimlico but was required to notify them on days on which he was unavailable;
  • was required to do a minimum number of hours a week but could decide his own working hours.

The decision

Although Mr Smith’s claim for unfair dismissal failed on the basis that he was not an employee, the Supreme Court upheld the decisions of the lower courts that Mr Smith was a worker, which did entitle him to basic employment rights such as protection from discrimination and entitlement to holiday pay.

The Tribunals take into account all the facts of a case in determining the status of a contractor and each case is determined on its facts. Factors which held particular importance in this case were the degree of control exercised over Mr Smith by Pimlico as well as restrictive covenants Pimlico expected Mr Smith to be bound by after their agreement ended.

While each case is decided on its own facts, it is necessary to remember that just because a person is called “self-employed”, the position in law might be very different. This could lead to a high financial liability on businesses that haven’t paid their contractors holiday pay as they were acting under the pretence that they were self-employed.

Comment

In our view, this decision is not necessarily going to cause a huge, immediate change to the face of the “gig economy” purely because each case is decided on its own facts.  In reality, Pimlico Plumbers did not operate the same model of “gig” workers that companies such as Uber and Deliveroo do and therefore the implications of the ruling may not be immediately felt in that respect. This is another case whereby the courts have demonstrated what might be described as an “employee friendly” approach in the decision reached, and have been prepared to look beyond the written documents (which were described in this case as being “carefully choreographed”) to find the basis of the true bargain struck between the parties.

Saying that, the government is consulting on this issue and it is quite possible therefore that legislation could be implemented in the next few months, or years, as a result of the ruling which will hopefully reduce uncertainty faced by businesses which rely on self-employed contractors.

If you are uncertain about the employment status of your work force, give our Employment team a call.

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