Will Pimlico Plumbers Case Put a Spanner in the Works for Employers?

Self-employment and the gig economy has never been a hotter topic within employment circles, and since our way of working is becoming less traditional, there is a feeling that the established employment models are being scrutinised and tested.

The Pimlico Plumbers employment dispute has caught the eye of the mainstream media – not least because of the charismatic, quirky CEO at the centre of the case, Charlie Mullins. And it is, of course, a case that many employers will have been watching very closely.

This month, the Supreme Court dismissed an appeal by the London-based supplier of tradespeople, against the decision that one of its plumbers, Gary Smith, was, in fact a worker rather than self-employed. Pimlico Plumbers felt strongly that since Mr Smith was, according to his contract, self-employed, and he enjoyed the benefits of this status, he should not then have the right to change this status in order to access the sick and holiday entitlements of a worker, once he had fallen ill.

In reaching their decision, the Court looked at a range of factors, to determine the actual employment status of Mr Smith. Some of the key factors within the test for worker status are:

• Is the worker someone who undertakes to perform work personally?
• Does the other party – in this case Pimlico Plumbers - have the status of a client or a customer?

In dealing with the first part of this test, it was found that whilst Mr Smith had the contractual right to send a substitute to carry out work on his behalf, such a substitute could only be another Pimlico Plumbers’ tradesperson. The Court held that such a limited right of substitution was not inconsistent with the ‘dominant feature’ of Mr Smith’s contract, which was an obligation of personal performance. Regarding the second part of the test for worker, Pimlico relied on the following arguments, commonly relied upon by employers to establish self-employed status:

• He presented himself as self-employed for tax and VAT purposes
• He was entitled to refuse particular plumbing assignments
• He was free to take outside work
• Pimlico did not have a right nor did it in fact supervise or interfere with the manner in which he delivered work; and
• He accepted a degree of financial risk (for example, he was only paid by Pimlico if the client paid)

Notwithstanding the evidence in support of these points, the Supreme Court upheld the previous decision by the Court of Appeal that Mr Smith could not be described as a client or customer of Pimlico. The decision was based on Pimlico’s ‘tight control over him [which] was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room.’

The judgment concludes by stating that ‘the severe terms as to when and how much it was obliged to pay him, on which [Pimlico] relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor’. 

The judgment underlines the point that simply labeling workers ‘self-employed’ does not then not guarantee that they hold the corresponding legal status. In fact, the detail of the relationship and the degree of bargaining power held on either side is what actually determines a worker’s status and their corresponding rights.

So, this ruling is a strong indication that employers need to be scrupulous about their employment models, to ensure they are a fair reflection of their actual employment practices. The ruling would seem to make it easier for people to establish that they are in fact workers, and it casts a shadow on the business model which sees self-employed people actually work solely for one company.

It remains to be seen whether this case, and the increasing number of others like it, will prompt any new legislation around worker status, since the so-called gig economy seems to be evolving at a swift pace.

For more information please contact our specialist Employment team here, or telephone one of our local offices below.

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