In the latest battle for workers’ rights in the gig economy, the Supreme Court handed down its eagerly anticipated judgment on the employment status of a plumber, Mr Smith.
The Supreme Court unanimously dismissed the appeal from the plumbing company, Pimlico Plumbers, and upheld that Mr Smith was in fact a “worker” as defined in the Employment Rights Act 1996 (ERA) and the Working Time Regulations 1998 (WTR). They also upheld that he was in fact “in employment” for the purposes of the Equality Act 2010 (EqA). Therefore, he was entitled to rights such as holiday pay and protection against unlawful deductions from wages and discrimination.
What happened in this case?
Mr Smith, worked on a self-employed basis with Pimlico for approximately six years over 2005 – 2011. He was provided with a company uniform, company identity card, mobile telephone and a rented van. He worked solely for Pimlico and was required to work a minimum number of 40 hours each week. Mr Smith paid tax on a self-employed basis, provided his own materials, and took and bore a significant proportion of the commercial risk. He could, however, choose when he worked and which jobs he took. In the contract, there was no express right of substitution, but in reality Pimlico’s plumbers could swap assignments between them.
When Pimlico terminated its arrangement, Mr Smith brought claims in the Employment Tribunal (ET) for failure to pay holiday pay, unlawful deduction from wages and disability discrimination.
The ET held that Mr Smith was a worker under the Employment Rights Act and Working Time Regulations, and an employee under the Equality Act. In the ET’s view, the main purpose of the contract was for Mr Smith personally to provide work for Pimlico therefore, satisfying the key element of the ‘worker’ definition.
Both the Employment Appeal Tribunal (EAT) and the Court of Appeal agreed with the ET’s decision and dismissed Pimlico’s appeal.
Pimlico appealed to the Supreme Court, but the Court unanimously upheld the decision of the Court of Appeal, agreeing that the ET was entitled to find that the dominant feature of the contract was an obligation of personal performance, even though Mr Smith did have the option to pass work to other Pimlico plumbers. It also agreed with the ET that Pimlico Plumbers exercised tight administrative control over Mr Smith, such that Pimlico could not be regarded as a client or customer of Mr Smith.
What this means for employers?
This decision does not lay down any new principles of law around employment status. Other than adding further weight in the future to any tribunal consideration of obligations of personal performance and the rights of substitution, the judgment will do little more. That being said, with this judgment the Supreme Court have reemphasised that decisions on employment status are always fact sensitive.
Therefore, as an employer, you should be mindful that the courts are willing to look behind the terms of a written contract to ascertain what the reality is on the ground. Employers may wish to examine the reality of their working relationships to ensure that their contracts reflect this in order to avoid these types of claims.