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Pimlico: a tiny nail in the coffin of the gig economy?

14.06.2018

Yesterday the Supreme Court ruled against Pimlico Plumbers in a dispute over whether one of their erstwhile operatives – a Mr Smith – was a ‘worker’.

Some commentators are questioning whether this case will have wider ramifications for the gig economy. The short answer as we see it is that this judgment alone doesn’t change much, except for Mr Smith himself.

It is, however, part of a wider trend of judgments against companies which seek to designate people carrying out work for them as self-employed. In that sense it is a glancing blow for the gig economy, rather than a knockout punch.

The facts of the case

Mr Smith was a Pimlico plumber in 2010 when he suffered a heart attack. Following this, he told the company he wanted to reduce his hours to three days a week to safeguard his health. Pimlico objected to this and ultimately decided to end their relationship with him.

Mr Smith then instigated a claim for unfair dismissal in an employment tribunal. Pimlico contested whether he was entitled to bring such a claim at all – they argued that he was a self-employed contractor and not a ‘worker’ in the legal sense. As only workers and employees may claim for unfair dismissal, they said he was not entitled to do so.

However, the employment tribunal found that Mr Smith was a worker and could therefore bring a claim. When Pimlico contested this decision at an employment appeals tribunal (EAT), the decision was upheld.

Now Pimlico has appealed again to the Supreme Court – who have sided with the original tribunal and EAT and said that they were entitled to decide Mr Smith was a worker.

How do the courts decide whether someone is a worker or self-employed?

In short, a contract which states that a person is self-employed doesn’t automatically make them so. Employment tribunals and the higher courts may take contracts into consideration, but ultimately they will examine the ‘true’ underlying relationship between the parties.

For example, in this case Mr Smith’s contract stated that he was self-employed. However, Pimlico retained a significant degree of control over Mr Smith’s work and working conditions. For example, he:

  • Worked under the Pimlico brand
  • Was required to wear a Pimlico uniform
  • Could not ‘share’ his workload with non-Pimlico plumbers – which was a crucial point of the original tribunal decision
  • Was subject to post-termination restrictions under the contract.

Furthermore, although the contract stated that Pimlico didn’t have to provide work to Mr Smith and Mr Smith had no obligation to accept any work offered, the Staff Manual said normal working hours consisted of a five day week, in which Mr Smith should complete a minimum of 40 hours.

Therefore, Pimlico had to offer work to Mr Smith, if there was work available to offer and Mr Smith had to be available to work at least 40 hours per week, albeit with the right to object to certain jobs (although if Pimlico insisted they were done, Mr Smith would have to comply).

This level of control is much more consistent with a worker relationship.

In essence, the old adage of ‘If it looks like a duck, walks like a duck and quacks like a duck, it is a duck’ is pertinent here. If someone appears to be a worker for a company, there is a good chance they are.

Does this affect other contractors?

No. The ruling applies only to Mr Smith’s employment status – in essence, the courts have ruled that he is a worker but have not expressed a view about whether ALL Pimlico contractors should be classed as workers.

Mr Smith can therefore continue with his unfair dismissal claim, but no other Pimlico plumbers, or indeed contractors for other companies, are directly affected by this ruling.

That said, if the courts have ruled that Mr Smith is a worker, there is a reasonable possibility that if other Pimlico plumbers were to seek worker status and the associated entitlements such as sick pay, they might be successful.

Pimlico, and companies which operate similar contractual arrangements, may therefore need to consider carefully the risks of this operating model.

To speak to a specialist employment solicitor about contractual arrangements, call us on 0117 325 2929 or complete our online contact form.

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