The Supreme Court today handed down its judgment in the long awaited case of Mr Smith and Pimlico Plumbers. The decision has a significant impact on those industries that are reliant on engaging consultants on a self-employed basis.
Pimlico Plumbers: Background to the case
Mr Smith was a plumber undertaking work for Pimlico Plumbers between August 2005 and April 2011 and engaged as an independent contractor. Mr Smith complained that, following a heart attack, he was unfairly/wrongfully dismissed and claimed entitlement to pay during medical suspension, holiday pay and arrears of pay. He also claimed direct disability discrimination, discrimination arising from disability and failure to make reasonable adjustments.
Pimlico Plumbers argued that Mr Smith was an independent contractor of the company, in business on his own account. During the proceedings Mr Smith accepted that while working for Pimlico Plumbers he believed the arrangement was that he was self-employed.
The relevant facts in determining the status were:
- The original contractual agreement between Pimlico Plumbers and Mr Smith, signed in 2005, described Mr Smith as a ‘sub-contracted employee’ and stated that the terms of the agreement were as detailed in the company manual
- Everyone working for Pimlico Plumbers was issued with a company identity card
- Mr Smith was supplied with a uniform marked with Pimlico Plumbers’s logo
- Mr Smith was issued with a mobile telephone
- Mr Smith was provided with a vans (marked with Pimlico Plumbers’ logo) although he paid a rental charge which was payable monthly in advance
- Mr Smith had worked solely for Pimlico Plumbers and there was a limited right to a substitute
- Mr Smith was required to complete a minimum of 40 hours
- Pimlico Plumbers had no obligation to provide Mr Smith with work on any particular day, and if there was no work for him he was not paid
The Employment Appeal Tribunal held that, during the period that Mr Smith worked for Pimlico Plumbers, he was a worker.
Pimlico Plumbers appealed to the Court of Appeal. The appeal was unsuccessful so Pimlico Plumbers appealed to the Supreme Court.
Supreme Court decision
The Supreme Court has this morning held unanimously that Mr Smith was a worker.
In summary, the Supreme Court held that Mr Smith had undertaken to personally perform his work/services for Pimlico Plumbers and that Pimlico Plumbers was neither the client nor the customer of Mr Smith. It held that the terms of the contract directed performance by Mr Smith personally and any right to a substitute was significantly limited.
What does this mean for employers?
This judgment is important and has huge implications not just for gig economy employers but those organisations who want to maintain a flexible workforce by engaging consultants on a self-employed basis.
Organisations should undertake an audit of those arrangements to assess whether their consultants could in fact be deemed to be workers.
Whilst this decision is fact-sensitive, it does provide useful authority on the personal service requirement and in particular when a contractual right of substitution might be inconsistent with personal service.