Workers or self-employed?
Supreme Court dismisses appeal in key worker status case.
A year ago, in a significant ‘gig economy’ ruling, the Court of Appeal held that Mr Smith, a plumber for Pimlico Plumbers Limited, was entitled to worker status despite signing an agreement with the company which described him as self-employed.
Generally, self-employed contractors qualify for fewer legal rights than individuals with ‘worker’ status. For instance, workers are entitled to national minimum wage, holiday pay and protection from discrimination. In contrast, self-employed contractors do not enjoy such rights though they do benefit from different tax treatment.
In February 2018, Pimlico appealed the decision in the Supreme Court. Pimlico argued that Mr Smith was entitled to reject work and was free to accept work from third parties. Pimlico also emphasised that they did not supervise or interfere with the manner in which Mr Smith did his work. Pimlico argued that Mr Smith took financial risks when working for Pimlico and therefore Pimlico was a client or customer of Mr Smith rather than his employer.
The Supreme Court considered various features of the contract in practice which suggested that Pimlico had tight control over Mr Smith and that they were neither Mr Smith’s client nor his customer. For instance, Mr Smith was required to wear a branded uniform, drive a branded van, complete a minimum of 40 hours’ work a week, carry an identity card and closely follow the administrative instructions of its control room.
In addition, the contract between the parties contained onerous terms as to when and how much Pimlico was obliged to pay Mr Smith, contractual references to ‘wages’, ‘gross misconduct’ and ‘dismissal’ as well as a suite of restrictive covenants regarding his working activities following termination.
The Supreme Court gave judgment on 13 June 2018 where it held that the employment tribunal had been entitled to conclude that Gary Smith was a worker despite the fact that he was working under a contract which described him as an independent contractor.
Pimlico Plumber’s appeal was dismissed.
This case is the highest case authority in the UK on the employment status of freelance workers. The case serves as a reminder that tribunals will look beyond the contractual wording in place between the parties in order to decipher whether an individual is entitled to worker status. As such, relevant companies should review not only their contractual wording, but also their business models, in order to minimise the risk of workers’ rights being triggered.