The Supreme Court, which is of course the UK’s highest court, has dismissed an appeal against an original ruling that a plumber who operated as an independent contractor was entitled to workers’ rights.
In Pimlico Plumbers Ltd and anor v Smith, the plumber in question, Mr Smith, worked solely for Pimlico Plumbers Ltd for six years and his contract stated that he was an independent contractor. He was also VAT registered and paid self-employed tax.
Following the termination of his contract in 2011, Mr Smith took Pimlico Plumbers to the employment tribunal with claims against the company for non-payment of holiday pay, unlawful deductions and disability discrimination – claims that would require him to be a worker.
The decision by the Supreme Court against Pimlico Plumbers’ appeal means that the tribunal examining Mr Smith’s original claims can go ahead.
Under the terms of Mr Smith’s contract, there was no express right to substitution although the company’s plumbers could swap assignments between themselves. In the judge’s view, the intention of the contract was for Mr Smith to provide his services personally to Pimlico Plumbers and that he did not have an unrestricted right to substitute as he pleased. This meant that he could be defined as a ‘worker’.
The employment tribunal and the Court of Appeal subsequently rejected Pimlico Plumbers appeals against this ruling, on the basis that the swapping of assignments between individual plumbers was, at most, an informal concession. The Court held that Mr Smith was considered to be an integral part of the company’s operations - he was required to hire a Pimlico Plumbers Ltd branded van, wear their uniform, carry an identity card and follow control room instructions – and therefore was not in business on his own account.
The Supreme Court upheld the judge’s view that Mr Smith was only entitled to substitute his services with those of another Pimlico Plumbers operative. This implied that the company had a specific interest in who carried out the work and not merely that it was completed.
It also backed up the original finding of the employment tribunal that an umbrella contract had been in place which meant that Mr Smith was obliged to make himself available for work. In their appeal, Pimlico Plumbers claimed that Mr Smith was entitled to reject offers of work from them and take alternative opportunities elsewhere. They also argued that, as a company, they did not closely supervise Mr Smith’s work and that these factors combined meant that they were, in fact, a client or customer of Mr Smith. However, this was rejected on a number of grounds, including the fact that his contract referred to ‘wages’, ‘gross misconduct’ and ‘unfair dismissal’, and that Pimlico Plumbers placed a number of restrictive covenants on Mr Smith following the termination of his contract.
Going forward, it will be interesting to see the impact that the Supreme Court decision has on freelancers and employers alike and, more widely, the gig economy as a whole. Thousands of workers like Gary Smith could now find themselves with the added security of benefits like sick pay and holiday pay.
If you engage ‘self-employed’ workers then you should act promptly in getting your contracts reviewed now to avoid potentially costly claims arising in the future.