The discussion concerning the status of workers and self-employed has been headline news in recent months. A recent Supreme Court decision in the high-profile and long-running case of Pimlico Plumbers Ltd v Smith has only reinforced these discussions having found that Mr Smith was in fact a worker and not self-employed for the purposes of employment status.
In a nut shell.
Mr Smith worked as a plumber for Pimlico Plumbers for six years until 2011. He successfully argued before the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal that he was a worker for the purposes of employment legislation. Pimlico maintained that he was a ‘self-employed operative’. Although Mr Smith filed tax returns on the basis that he was self-employed, was VAT registered, was entitled to reject work and was able to take outside work, significant factors in deciding he was in fact a worker included:
- the requirement to wear a Pimlico branded uniform and to use a Pimlico branded van leased from Pimlico;
- the requirement to carry a Pimlico identity card and closely follow the administrative instructions of its control room;
- the contract referred to ‘wages’, ‘gross misconduct’ and ‘dismissal’, and included a suite of restrictive covenants concerning Mr Smith’s working activities following termination.
- whilst there was the ability to swap assignments with other plumbers already working for Pimlico, it was a case of swapping a shift between workers rather than providing a substitute – this was not a case where the employer was uninterested in the identity of the substitute.
The Supreme Court’s decision will enable Mr Smith to proceed with claims of disability discrimination, unlawful deduction from wages and holiday pay against Pimlico.
What you need to consider?
This decision does not add to or change the established principles involved in determining employment status, but it reinforces and supports the recent trend, particularly across the gig economy, for findings that individuals supposedly being self-employed are in fact workers for the purposes of employment rights.
You can obviously still contract with genuinely self-employed contractors. However, it is important to establish the true relationship with them rather than relying on contractual headlines or tax structures (status for tax purposes is separate to status for employment purposes). A close analysis of your contractual arrangements and working practices will help to identify any risk areas and any changes which might be appropriate.