Supreme Court rules Pimlico plumber was a worker, not self-employed

The Supreme Court has ruled that an employment tribunal was entitled to conclude that a plumber who worked under a contract which described him as an independent contractor was in fact a worker.     

Facts

In Pimlico Plumbers v Smith, Mr Smith was engaged by Pimlico as a plumber under a contract that provided that he was an independent contractor in business on his own account. Pimlico terminated its relationship with Mr Smith after he suffered a heart attack.  He brought claims for unfair dismissal, disability discrimination and holiday pay.  The employment tribunal had to consider whether he was an employee, worker or self-employed.  It ruled that he was not an employee and so could not claim unfair dismissal.  However, he was a worker and so he could proceed with his other claims.

Pimlico appealed unsuccessfully to the Employment Appeal Tribunal and Court of Appeal and then appealed to the Supreme Court.

Decision 

The Supreme Court ruled that the employment judge had been entitled to conclude that Mr Smith was a worker. To qualify as a worker, it was necessary for him to have undertaken to personally perform work or services for Pimlico and for Pimlico not to be a client or customer of a business carried on him.   

Personal service

The Supreme Court ruled that the employment judge had been entitled to find that Mr Smith had only a limited right to appoint a substitute to do his work. The right (which was not in the contract) was limited to appointing another Pimlico plumber where he had quoted for work which he no longer wished to do, for example because a more lucrative job had arisen. That was entirely different to a situation where there is an unfettered right to substitute and the employer is uninterested in the identity of the substitute, provided that the work gets done. In addition, the contractual terms in this case were clearly directed to performance by Mr Smith personally – he was required to provide such services as were within his skills, to warrant that he was competent to perform the work and to attain high standards of conduct and performance. The employment judge had therefore been entitled to conclude that the dominant feature of the contract was an obligation of personal service and that the limited right of substitution was not inconsistent with that obligation. 

Client or customer 

The Supreme Court noted that on the one hand, Mr Smith was free to reject a particular offer of work, was free to accept other work, bore some of the financial risks of the work and that the manner in which he undertook the work was not supervised by Pimlico. However, there were also features of the contract which strongly militated against recognition of Pimlico as his client or customer. Its requirement that he wear the Pimlico uniform, drive its branded van (to which Pimlico applied a tracker) and that he follow the administrative instructions of its control room all indicated Pimlico’s tight control over him. In addition, its severe payment terms (Pimlico only paid him if it received payment from the customer, his payment was reduced by 50% if an invoice remained unpaid for more than a month and he was not paid at all if it remained unpaid after six months) were inconsistent with his being an independent contractor, as were the covenants restricting his activities post-termination and the references in the contract to “wages”, “gross misconduct” and “dismissal". The employment tribunal had therefore been entitled to conclude that Pimlico could not be regarded as a customer of Mr Smith and that he was a worker and not an a independent contractor.

The case will now return to the employment tribunal so that it can decide the merits of Mr Smith’s claims.  

Implications

Although this is an important win for Mr Smith, the Supreme Court’s decision contains nothing new in terms of the tests for determining employment status and their application. The case has received heightened attention because employment status is a hot topic due to the number of claims brought by gig economy workers and in light of the Taylor Review of Modern Working Practices.  

One of the Taylor review recommendations was that when determining whether someone is a worker or an independent contractor, there should be greater emphasis on whether the employer exercises control and less focus on whether there is an obligation of personal service.  He was critical of the fact that an individual can have almost every aspect of their work controlled by the employer but still not be considered a worker if a genuine right of substitution exists. The Deliveroo case is a recent example of a case where a genuine right of substitution defeated a claim for worker status. In that case, the rider could use any substitute and did not need Deliveroo’s approval of the substitute used. This defeated the claim that the riders were workers as it was inconsistent with an obligation to perform the work personally.  The Independent Workers Union of Great Britain is currently seeking permission to apply for a judicial review of the decision.

In response to the Taylor review recommendations, the Government consulted on how to achieve greater clarity on employment status.  The consultation closed on 1 June and its response, which could include legislative changes, different tests and/or an online assessment tool, is awaited.