Pimlico Plumbers’ Appeal Goes Down the Drain
26th June 2018
In the widely reported case of Pimlico Plumbers v Smith, the Supreme Court appears to have finally brought an end to a long and arduous legal dispute by ruling that Mr Smith was a worker for the purposes of employment law, and not self-employed. In doing so, they vindicated the decision of the Employment Appeal Tribunal and Court of Appeal.
The claimant, Mr Smith, was engaged by Pimlico Plumbers (‘Pimlico’) as a plumber under a contract which stated that he was an independent contractor. Mr Smith suffered a heart attack and, shortly after, his engagement was terminated. This led the claimant to bring claims of unfair dismissal, disability discrimination and claims for unpaid holiday pay. One of the issues for the tribunal to determine was whether or not Mr Smith was self-employed, a worker (who enjoy limited employment rights) or an employee (who enjoy the full suite of employment rights). Although they ruled he was not an employee (and hence unable to claim unfair dismissal) they found he was a worker and therefore entitled to proceed with the remainder of his claims.
Both the Employment Appeal Tribunal and Court of Appeal rejected Pimlico’s appeals against this ruling. The Court of Appeal found that Pimlico was seeking to publicly present its plumbers as an integral part of their workforce, yet on the other hand sought to contractually engage with them as though they were self-employed. These objectives were irreconcilable in practice and the court ruled that the contractual documentation was “carefully choreographed” and did not reflect reality.
Pimlico was granted leave to appeal to the Supreme Court, who have now issued their judgement.
Ruling of the Supreme Court
The two critical issues the Supreme Court focused on were whether or not the claimant was ‘obliged to carry out his services personally’ and whether Pimlico was ‘a client or customer of a business carried on by Mr Smith’.
To be considered a worker, it was necessary for Mr Smith to show he had undertaken to personally perform services for Pimlico and that Pimlico was not his client or customer.
The Supreme Court drew significance from the fact that the right to appoint a substitute in place of Mr Smith was severely limited. Mr Smith was only permitted to appoint another Pimlico plumber in his place, rather than being free to appoint anyone at all as a replacement to ensure the work was completed. Additionally, the terms of the contract clearly showed Pimlico intended for Mr Smith to carry out the work himself. He was required to warrant that he was competent to carry out the work and was personally required to maintain high standards of conduct and performance. As a result, it could clearly be inferred that there was an obligation of ‘personal service’ despite the limited right of substitution.
Client or customer
The Supreme Court accepted that Mr Smith was permitted to reject offers of work and accept work from elsewhere. They also accepted that Mr Smith took on a certain element of the financial risk in relation to work carried out. In spite of that, the Supreme Court found that the facts overall were not consistent with Pimlico being a client or customer of Mr Smith. There was a clear element of ‘control’ which Pimlico exercised over Mr Smith. He had to wear a branded uniform, drive a branded van (with a tracker monitored by Pimlico) and carry a Pimlico ID card, among other things.
Principally on account of these two factors, Pimlico’s case was dismissed and Mr Smith is now entitled to continue his claims for holiday pay and discrimination.
The Pimlico Plumbers case was widely reported in the media and was thought by many to have far-reaching effects for the UK’s ‘gig economy’. However, on proper reflection, the case actually does little other than to restate the law as it previously stood. The relevant test for the court to consider in determining employment status remains unchanged and each case turns on its own facts. The court will look beyond the contract and will not necessarily be transfixed by how the contract describes the relationship. They will instead consider all of the relevant factors, with particular importance placed on the level of control exerted over the individual, the right to appoint a substitute, the freedom of the individual to accept or reject work and the assumption of risk on the part of the individual.
Despite this, a clear element of uncertainty remains, and it will be hoped that further guidance will be provided by the similar case of Uber and CitySprint, whose appeals are due to be heard later this year.
Given the implications worker status can have, employers should undertake regular reviews of their contractual relationships to identify any exposure to claims for minimum wage, holiday pay or maternity/paternity pay. If input or advice is required, WJM’s employment team will be on hand to assist (firstname.lastname@example.org).
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at June 2018. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.