The Court of Appeal (CA) has dismissed an appeal by Pimlico Plumbers by upholding that one of their plumbers, Mr Smith, is a worker rather than a self-employed contractor, entitling him to workers’ rights.
Mr Smith originally brought the case at the Employment Tribunal (ET) in 2012. He claimed unfair dismissal from Pimlico after he suffered a heart attack and had his contract terminated. He had worked solely for the Company from August 2005 to April 2011.
Section 230 of the Employment Rights Act 1996 stipulates that a worker is an individual who works under a contract whereby they undertake to do or personally perform work for another who is not a client or customer. It was held that the measures actually outlined in his employment agreement indicated Mr Smith was a worker. This is important in terms of the rights Mr Smith is entitled to during his employment. Being categorised as a worker means that he will be benefit from the national minimum wage, protection from discrimination and holiday and sick pay. Under a self-employed status, Mr Smith would not be entitled to enjoy such rights and would only benefit from different tax treatment and the flexibility of working for himself.
An agreement created between the parties in 2005 stated that Mr Smith would be required to wear a uniform, operate a van bearing a Pimlico logo, work a 40-hour minimum week and liaise with the Company regarding annual leave. This agreement was amended in 2009 outlining similar terms in more detail and did not suggest that the 2005 agreement was no longer applicable.
The CA maintained that Mr Smith was a worker because he provided work personally for Pimlico, he was obliged to work a set number of hours on agreed days, and there was a high degree of restriction on his ability to work for a competitive company suggesting that he was not in business on his own account. However, Mr Smith lost the unfair dismissal element of the claim owing to the fact that he was found not to be an employee.
Although there was comment by the CA that this case was not “entirely straightforward", it is likely to be a leading case on employment status in future years. Importantly, a clear summary of the principles for the 'personal service' aspect of the employment status tests was given.
This decision has highlighted the need for legal clarity around the status of those working on a self-employed basis in the gig economy and it shows that Tribunals and Courts are willing to look beyond the labels that businesses choose to provide their staff, and consider the true reality of the working relationship.
This case follows a rise of similar cases evolving out of the flexible business models adopted by the gig economy, including Uber, CitySprint and Deliveroo. It seems that courts are aware of the inequality of bargaining power faced by individuals in these circumstances and the CA decision in Mr Smith’s case will certainly be relevant to the upcoming EAT appeal by Uber and to all other gig economy employment status cases currently in the spotlight.
Employers are therefore reminded that they should be careful when considering the question of status for individuals who work for them.