In Pimlico Plumbers Limited v Smith, the Court of Appeal has upheld the decision of the Employment Appeal Tribunal to find that Mr Smith, who was engaged as a self-employed contractor, was also a “worker” under the Employment Rights Act 1996 and the Working Time Regulations 1998, and an “employee” under the wider definition of that term in the Equality Act 2010.
Mr Smith (S) signed a ‘self-employed operative’ agreement with Pimlico Plumbers (PP). The agreement provided for the performance of “building trade services” by S. His working hours would be agreed between the parties; PP was not obliged to provide work, nor was S obliged to accept work. It also expressed that S would comply with all reasonable rules and policies of PP, including those contained in its company manual.
The manual set out numerous work requirements, including wearing a PP uniform, carrying a PP ID card at all times, working at least 5 days and 40 hours a week, leasing a van from PP adorned with the company logo and holding a mobile phone (with the tariff deducted from monthly wages). Plumbers had to contact the PP control room frequently and make all customer contact, appointments and scheduling through the control room. Plumbers would also not be paid until PP had received payment from customers and could even receive wage deductions if a customer did not honour a payment or made a late payment. The agreement also contained eight restrictive covenants which restricted the post-termination business activities of S. The agreement did not include any express right for S to send a substitute in his place. However, S did have to provide his own tools and equipment and pay for accounting costs and professional indemnity insurance. He also filed tax returns and believed himself to be self-employed.
Following the termination of the agreement, S brought claims alleging unfair dismissal, wrongful dismissal, entitlement to pay during the period of a medical suspension and failure to provide particulars of employment. These claims all depended on S being an “employee” within the meaning of the Employment Rights Act 1996 (ERA), i.e. employed under a contract of employment. The Employment Tribunal (ET) held that S was not employed under such a contract and so had no jurisdiction to hear these claims.
S additionally claimed unpaid holiday pay and unlawful deductions from wages. This required him to show he was a “worker” under ERA and the Working Time Regulations 1998 (WTR). That is, an individual either working under a contract of employment or any other contract whereby he personally performs any work or services for another party who is not a client or customer of any profession or business carried on by the individual. S also claimed disability discrimination, which required him to be an “employee” within the extended definition of that term under the Equality Act 2010 (EA) and such definition essentially follows the definition of “worker” in the ERA and WTR.
The ET found that S was a “worker” for the purposes of the WTR and ERA. Therefore, he was also entitled to the protection of the EA. The purpose of the agreement was for S to personally provide work for PP, which included completing minimum working hours without the right to a substitute. Although S had autonomy in respect of the estimates he gave and in carrying out the work, PP enjoyed such a degree of control that S could not be considered to be self-employed and running his own business. PP appealed.
The Employment Appeal Tribunal upheld the decision of the ET. The ET had correctly considered the facts, including that S had no right to provide his services through a substitute and that the restrictive covenants were inconsistent with the idea that S was running his own business. PP subsequently appealed to the Court of Appeal.
The Court of Appeal supported the decision of the ET and held that S was a “worker” and not carrying out a business on his own account. The express wording of the agreement required personal performance from S. S also had no right of substitution and was obliged to work a normal 40 hour week under the company manual. Furthermore, the notion that S was under no obligation to accept work was undermined by this minimum working hours requirement and the practical realities of the relationship. As S had to cover costs, such as tools, van expenses and a mobile phone tariff, the relationship between PP and S would only work if S was given and worked a minimum number of hours to cover those costs and make a profit. For these reasons, the appeal was dismissed.
Paula Bailey comments: "Following several high profile cases, this decision offers further guidance on the issue of worker status and worker rights. Once again, the courts have emphasised that contracts will be rigorously scrutinised against the realities of the working relationship when determining employment status. Here, personal performance and the degree of control exercised by the company were critical factors".
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