The decision in Pimlico Plumbers Ltd v Smith is the latest look at the distinction between those who are workers and those who are genuinely self-employed.
Mr Smith entered into a "Self-employed operative" agreement, under which he agreed to provide services to Pimlico Plumbers. He had no entitlement to be offered work and no obligation to accept any work that was offered, invoiced the company for fees, paid his own tax, and provided his own tools and equipment. When the agreement was terminated, he brought various claims against the company, including for disability discrimination and unpaid holiday pay.
To bring those claims, he needed to be a "worker" under the Employment Rights Act (the definition of "employee" in the Equality Act is similar). A worker is someone who is obliged to perform work or services personally for the other party to the contract, where the other party is not a client or customer of a business operated by the individual. Pimlico Plumbers argued that the claimant was not a worker. Mr Smith did not have to provide his services personally and the agreement was between Mr Smith as a self-employed person and Pimlico Plumbers as his customer.
The tribunal, EAT and Court of Appeal all rejected those arguments. The Court of Appeal decided that Mr Smith was under an obligation to provide his services personally, because there was no express or implied power of substitution in the agreement that would have allowed him to delegate his work to someone else. The fact that there was an informal limited concession that allowed him to allocate work to another Pimlico operative did not change the position.
Mr Smith was also required to work 40 hours a week and this was inconsistent with self-employed status. Although the agreement said that the company had no obligation to offer work and Mr Smith had no obligation to accept it, the company's procedures manual said that normal working hours consisted of 5 working days and 40 hours. This meant that Mr Smith normally had to be available to take on work for 40 hours a week, but the company did not have to offer him work if work was not available, and he was not obliged to carry out a particular assignment on any particular day if he did not wish to do so.
Taken with other factors, such as the degree of control exercised by Pimlico Plumbers and onerous restrictive covenants in the agreement, the tribunal was entitled to conclude that the relationship between Mr Smith and Pimlico Plumbers was one of worker and employer rather than self-employed business and customer.