Supreme Court judgment in the appeal of Pimlico Plumbers and another v Smith

June 15, 2018

The impact of this judgment is unsettling for businesses operating in a gig-economy.

The Supreme Court has handed down its judgment in the appeal of Pimlico Plumbers Limited and another v Smith, determining that a so-called “self-employed” plumber was in fact a “worker” for the purposes of Employment Law legislation.

This is the latest in a line of well-publicised, similar rulings, involving businesses including Deliveroo and Uber. The impact of these judgments is unsettling for businesses operating in a gig-economy, as it exposes them to potential claims from individuals wishing to pursue certain employment rights, including the right to receive the National Minimum Wage and holiday pay.

In general terms, individuals providing services to employers fall into one of three categories: employees (who benefit from the most employment rights); workers (who benefit from a mid-level of employment rights); and self-employed contractors (who have almost no employment rights). The distinction is not always clear-cut, partly because there is no legal definition of “self-employed”, and there are varying definitions of “employee” and “worker” across employment and tax legislation. As such, case law has established a number of tests which are used by Tribunals and Courts in order to help determine employment status. These include:

Mutuality of obligation – where an employer is obliged to offer the individual work and the individual is obliged to perform it. Self-employed individuals are likely to have much more flexibility and freedom than employees or workers, when it comes to these arrangements.

Personal service – where there is an obligation on the individual to provide work personally. Self-employed individuals often have an unfettered right of substitution.

Control – where the employer controls the relationship such as by requiring a uniform, by determining salary and controlling hours. Self-employed individuals will often have freedom over clothing, working hours and be paid in accordance to invoices for time-spent.

The Supreme Court found that the level of control exercised by Pimlico, and the requirement for Mr. Smith to provide personal service, were decisive factors in concluding his worker-status. Although cases of this sort have kept the courts busy for some time, this latest judgment is likely be seen as another win for workers, giving them further confidence to pursue their claims, now with case law from the UK’s highest court.

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