Pimlico Plumbers Limited and another v Smith [2017]

The term ‘gig economy’ is used to describe an environment comprised of temporary and irregular work arrangements and the decision in Pimlico Plumbers Limited and Another v Smith [2017] is the most recent legal ruling on employment status in the gig economy. In this case, the Court of Appeal upheld that an individual was a worker and not self-employed.

The Claimant claimed that following a heart attack in January 2011, he was unfairly or wrongly dismissed by Pimlico Plumbers on 3 May 2011.

The Claimant issued a claim on 1 August 2011 alleging unfair dismissal, wrongful dismissal, entitlement to sick pay, holiday pay and arrears of pay. He also claimed direct disability discrimination and failure to make reasonable adjustments.

A pre-hearing was listed to address the employment status of the Claimant and decide on:

  1. whether the Claimant was an employee;
  2. whether the Claimant was a worker;
  3. whether the Claimant’s working circumstances met the definition of “employment” in section 83(2)(a) of the Equality Act 2010; or
  4. whether the Claimant was genuinely self-employed in business on his own account.

During the course of the Court proceedings, the Claimant acknowledged that he had filed tax returns on the basis that he was self-employed, was VAT registered and issued monthly invoices to Pimlico Plumbers for VAT purposes.

It was held that the Claimant was engaged to personally provide work for Pimlico Plumbers and no evidence was found to suggest an unfettered right to provide the services he was engaged to do through a substitute if he was unable/unwilling to do them himself. Additionally, the Claimant was required to work a normal week of 40 hours under the Company’s Procedures and Working Practices which formed part of the Claimant’s original terms of agreement in 2005 and the assumption was that it still applied following a new agreement with Pimlico Plumbers in 2009.

On the other hand, in its ruling, the Court of Appeal upheld the decision of an earlier employment tribunal that the Claimant was a worker for the purposes of the Employment Rights Act 1996, Working Time Regulations 1998 and an employee within the definition of the Equality Act 2010. In other words, it was held that Pimlico Plumbers had engaged the Claimant under a contract of personal service and as such, the Claimant had ‘worker’ status entitling him to certain rights, including, protection against unlawful deductions from wages, protection against unlawful discrimination, statutory sick pay and the statutory minimum level of paid holiday.

The Master of the Rolls commented that the relevant factors in determining whether an individual is genuinely self-employed could include a right to substitute their labour at will and the extent to which the individual is integrated into the business of the alleged employer.

Together with the recent employment tribunal decisions in the Uber and Citysprint cases (as reported in earlier newsletters), this case is another significant decision in worker status. It is clear that giving a qualified right of substitution to an individual contractor may no longer be enough. Therefore, companies must think carefully when drafting agreements with contractors. This ruling could offer greater protection for many of those who are considered as self-employed, but who are in fact workers, if one is to closely examine the working relationship in practice.

It is advisable that businesses, who are dependent on independent contractors as an essential part of their services, carefully review the status of these relationships.

Dom Bonham