In an important UK case dealing with the gig economy, the UK Court of Appeal has today upheld a lower court’s decision that a plumber engaged notionally as a self-employed contractor was in reality a worker. It has important implications within and beyond the skilled service sector and online economy, and especially for business advisory, medical services and IT practices.
This is one of a number of recent cases to examine the status of workers in the gig economy. This decision is more important than the Uber drivers or City Sprint courier cases. It is a Court of Appeal decision – the level immediately below the UK’s Supreme Court.
The plumber worked on a self-employed contractor basis and many aspects of his circumstances supported this. For example, he raised invoices, was VAT registered, personally accounted for his income tax and provided his own tools, equipment and materials. He could choose particular working hours and could reject particular jobs. However, he was branded to customers as a Pimlico Plumbers person, he had to wear their uniform and drive a branded van and, crucially, was required to provide his services personally. As a result of this, like drivers and couriers, he was classed as a “worker”.
In upholding this ruling, the Court of Appeal has reinforced the recent pattern of how UK courts will look beyond the contractual arrangements between the parties, and will consider the context and work practices when deciding the employment status of an individual.
In particular, the existence of post-termination restrictions including non-competes was an important feature in determining worker status – the plumber was under a restriction, effectively preventing him from working in his occupation for three months after leaving Pimlico Plumbers. A business like Pimlico cannot have its cake and eat it: if it wants to say someone is self-employed, their economic freedom and ability to compete are an important feature of that status.
The judgment also looks closely at the use of company manuals and brand-reinforcement products as means of control.
For all companies this reinforces the need to review the documents and relationship that they have with their contractors. It is increasingly clear that in order to avoid potential claims by contractors to be recognised as a worker, companies need to ensure that the reality of the situation accurately reflects the contractual arrangement and has the characteristics of a self-employed relationship. In particular, companies may want to look again at the terms included in such arrangements for their business protection. It will likely carry weight in the mainstream economy as much as in the continuing flow of gig economy and courier cases yet to be heard..