Decision: Court of Appeal in Pimlico Plumbers v Smith
Decision of the Court of Appeal in Pimlico Plumbers v Smith
Whether an individual is an employee, a worker or simply self-employed is important for the purposes of determining the level of legal protection afforded to them. The rise of the ‘zero hours’ contract in recent years, combined with an increase in flexible working has led to a move away from the traditional employment model. As a result, employers and employees are arguably becoming more aware of ways in which they can seek to engage in more casual working relationships. This decision follows some recent high profile ‘gig economy’ cases and again brings the question of employment status into the spotlight.
Mr Smith was a plumber who carried out work solely for Pimlico Plumbers (‘Pimlico’) between 25 August 2005 and 28 April 2011. Mr Smith dealt with his own tax returns, was registered for VAT and submitted invoices to Pimlico for payment, however he was required to wear a Pimlico uniform, drive a van with Pimlico’s logo on the side and comply with various other rules imposed by Pimlico.
Pimlico terminated Mr Smith’s employment in May 2011, following which he brought claims for unfair and wrongful dismissal. In order to proceed with these claims, Mr Smith had to show that he was an ‘employee’ within the meaning set out in the Employment Rights Act 1996. Mr Smith also brought claims for holiday pay and unlawful deductions from wages which only depended on him establishing his status as a ‘worker’, and claims for disability discrimination which required his employment to fall within with an extended definition of ‘employment’ set out in the equality legislation.
The Employment Judge held that Mr Smith was not an ‘employee’ but that he was a ‘worker’. It was also held that he met the extended definition of ‘employment’ under the Equality Act 2010 entitling him to proceed with his discrimination claims. In reaching her decision that Mr Smith was a worker, the Employment Judge took account of the fact that (i) Mr Smith was required to personally provide work; (ii) he was required to work a certain number of hours; (iii) there was no unrestricted right to send someone else to work in his place; (iv) although Mr Smith could exercise some autonomy, Pimlico was generally in control; and (iv) Mr Smith was not in business on his own account but was instead an integral (but subordinate) part of Pimlico’s operations.
The tribunal’s decision was upheld on appeal to the Employment Appeal Tribunal. Pimlico subsequently appealed to the Court of Appeal.
The Court of Appeal recognised that “this case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker.”
The Court of Appeal agreed with the tribunal’s findings and dismissed the appeal. It was recognised that Mr Smith undertook to personally provide his services to Pimlico and that in doing so, there was no express right of substitution or delegation. The Court also noted that Mr Smith was obliged to work a certain number of hours per week and the restrictive covenants contained his contract were inconsistent with genuine self-employment.
This decision may be appealed to the Supreme Court on the question of employment status, otherwise it will go back to the tribunal to decide whether Mr Smith was in fact discriminated against or is due holiday pay and other payments. It will be interesting to see where this case goes and the impact that it may have on future decisions relating to worker status in the gig economy.
A copy of the full judgement can be found here: https://www.judiciary.gov.uk/wp-content/uploads/2017/02/pimlico-plumbers-v-smith.pdf