In a key gig economy case decision, the Supreme Court has decided that a plumber who brought a case against his former employer was in fact a “worker” and should therefore be entitled to holiday pay and other basic workers’ rights.
Gig economy developments
The Court upheld the previous decision by the Court of Appeal that Gary Smith, who worked for Pimlico Plumbers, could be described by a worker despite signing an agreement with the company describing himself as self-employed, and filing tax returns to this effect.
Gary Smith’s case against Pimlico Plumbers, which has been running since 2011, is the latest in a long line of legal challenges on employment status, and “is in line with a number of recent decisions relating to gig economy workers”, according to Jeremy Coy, an associate in the employment team at law firm Russell-Cooke.
He said: “The judgment of the UK’s highest court underlines the point that simply labelling workers ‘self-employed’ does not guarantee the corresponding legal status. The nature of the relationship and the degree of bargaining power and obligation between the parties is crucial in determining workers’ rights.”
However, while the decision is good news for Smith, many employers and legal experts had hoped this case might set out greater clarity over how to determine employment status.
Susannah Kintish, employment partner at Mishcon de Reya, has been leading the case for Pimlico Plumbers against Smith. She said: “This judgment does not lay down any new principles of law around worker status.
“Instead, all eyes will be on the Government as businesses await legislation on how to categorise their workforce – something that could still be a matter of years away. In the meantime, the gig economy continues to evolve and existing employment law is rendered increasingly unfit for purpose.”
She added that the Supreme Court had made it clear that the judgment rested heavily on the unique facts of this case, rather than setting out any new legal principles for employers.
“It will therefore do little to stem the flow of litigation around worker status which, in the absence of any overarching principles, will need to be determined on the specific circumstances of each case,” she added.
Employment law trainer and consultant Darren Newman had predicted that this might be the outcome in his blog, saying it would be a “damp squib”.
“The disappointing aspect of this decision is that the Court has not moved the law on – or even clarified how it works,” he said.
Tim Goodwin, an associate at Winckworth Sherwood, advised employers to follow a “basic rule of thumb” when considering employment status, in particular with regards to the level of control an employer exerts over a worker.
This can only lead to a tsunami of claims.” – Charlie Mullins, founder, Pimlico Plumbers
He said: “As a business, you cannot expect to exercise complete control over your staff while at the same time deny that they are workers, or even employees.
“In this case, the individual had to wear a uniform, work a 40-hour week, was subject to disciplinary rules and was limited in who he could work for after he had left. This gave Pimlico Plumbers enormous control over his activities. But it also significantly undermined Pimlico Plumbers’ key contention that he was self-employed.
“Furthermore, even with a high level decision like this, to a degree the issue of employment status in the gig economy is up in the air. The Government is consulting on this issue, and may bring forward legislation.”
He added that it was “quite possible that Parliament may overrule this decision within the next few months or years”, if it contradicts any new legislation.
The Business, Energy and Industrial Strategy Committee published a draft gig economy Bill last November but is yet to confirm fully how it will implement the recommendations made in Matthew Taylor’s Review of Modern Working Practices. Recent gig economy cases including those against Uber and CitySprint have tended to rest on the facts of each case.
Kintish added: “Individuals operating in the gig economy need certainty that they have been categorised correctly, and businesses are equally keen to get this right from the outset, recognising that doing so is in their own interests.
“Balancing a flexible workforce with the control required to protect a brand will continue to present a significant challenge for businesses, with many likely to be disappointed that this judgment does not plug any legislative gaps.”
Yesterday, a group of Deliveroo drivers represented by the Independent Workers Union of Great Britain (IWGB) began a high court battle to overturn a previous ruling that they were self-employed and therefore not entitled to workers’ rights such as holiday and sick pay.
In November, the Central Arbitration Committee ruled that the drivers could not be classified as workers because they were able to ‘substitute’, as in pass on jobs to others where needed.
In today’s Supreme Court decision, the issues of substitution and personal service were of central importance. Barry Stanton, head of employment law at Boyes Turner, said: “Lord Wilson, in handing down the Supreme Court decision, focused on two key issues – personal service and whether Mr Smith was running a business on his own account.
“On the personal service issue, the Supreme Court noted that whilst there was a right to send a substitute, it was only someone who already worked for Pimlico and that the dominant feature of the arrangement was personal service.
“When considering whether Pimlico were a client or customer of Mr Smith’s, it noted the tight control that Pimlico had over Mr Smith in relation to branded uniforms and vans, the instructions issued from the control room, the terms as to how much it was obliged to pay him, and the restrictions on his ability to compete, post-termination.”
Alan Smith, employment partner at Irwin Mitchell, echoed this point, saying: “This is the end of the road for Pimlico Plumbers and this case will go back to the tribunal to examine Mr Smith’s claims in detail.
“However, it is not a game changer as the Court did not take the opportunity to provide clarity around the difficult concepts of mutuality of service. This means that cases will continue to be argued on their specific facts and, for businesses that rely on self-employed contracts, that means further uncertainty.”
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Pimlico Plumbers founder Charlie Mullins told reporters he was “disgusted with the approach taken to this case by the highest court in the United Kingdom”.
He added: “This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get a nasty surprise from a former contractor demanding more money, despite having been paid in full years ago.” Mullins predicted it would lead to a “tsunami of claims”.
