The Court of Appeal’s ruling in Pimlico Plumbers Limited v Smith, that a plumber whose contract described him as an independent contractor was a worker under the Employment Rights Act 1996 (ERA) and Working Time Regulations 1998 (WTR), and in employment for the purposes of the Equality Act 2010, has been upheld by the Supreme Court.
Mr Smith brought a number of tribunal claims in 2011 alleging unfair dismissal, disability discrimination, unlawful deductions from wages and for unpaid statutory annual leave. While he was correctly registered as being self-employed, he worked entirely for Pimlico Plumbers Ltd. The agreements he worked under stated he was an independent contractor, but incorporated the company manual, which imposed a number of obligations on him.
The employment tribunal held that Mr Smith was not entitled to bring a claim for unfair dismissal, but did find that he was a “worker” under the ERA and WTR, and in “employment” under the Equality Act. This was because he had to provide a personal service to the company and, while he could choose not to take on certain jobs, this right of substitution was a limited one. Mr Smith also had a set number of minimum hours to work which he did not have a right to substitute. Pimlico Plumbers Ltd retained control over him, and he had to wear their uniform, and carry their ID card. It was accordingly found that Mr Smith would be able to continue with his other claims.
Pimlico Plumbers Ltd’s appeals to the EAT and Court of Appeal were dismissed. The Court of Appeal described Mr Smith as an integral part of the company’s operations. It also found that, as Mr Smith had to cover a number of costs himself (such as paying for tools and running his van), he had to work a minimum number of hours for Pimlico Plumbers in order to make the relationship profitable for him.
The Supreme Court has now dismissed Pimlico Plumber Ltd’s further appeal. It found that Mr Smith had undertaken to provide a personal service to Pimlico Plumbers, and while he could pass work on which he did not want to carry out, any such jobs had to be passed to another Pimlico worker who was subject to the same obligations as Mr Smith; he did not have complete discretion as to whom he passed the work, and it was not a case of passing work on to anyone for the sake of getting it done.
The Supreme Court also agreed that a number of features in Mr Smith’s contract, such as the restrictive covenants which would be imposed on him on termination, the requirement for Mr Smith to drive a Pimlico branded van and wear a Pimlico uniform, and the fact Pimlico controlled his payment and administrative duties, negated the argument that Pimlico was a client or customer of Mr Smith.
Hannah Ball comments:
“This case emphasises the importance of ensuring that where “independent contractors” are engaged the relationship is properly assessed (and regularly reviewed). Whilst it remains important to properly document the terms on which any individual is engaged, employment status will not be determined by the “label” given to it by the parties and instead the reality of how the relationship operates in practice will be key. If you require any assistance with assessing the employment status of your workers or drafting contractual documentation, please contact a member of the team ”