News
Jessica Fino 13 Jun 2018 03:09pm

Pimlico Plumbers loses landmark employment appeal

Pimlico Plumbers has lost its appeal against an earlier ruling that one of its self-employed contractors was in fact an employee

The Supreme Court dismissed the appeal on Wednesday, after concluding that Gary Smith, a self-employed plumber who worked solely for the business for six years is in fact a worker there.

The case was initially brought to court by Smith, at which time Pimlico Plumbers’ CEO Charlie Mullins said it would have “significant ramifications on employment law for a number of industries”.

Smith was VAT-registered and paying tax on a self-employed basis. He also provided his own equipment, accepted personal liability for work he undertook and provided his own insurance cover.

However, his work was subject to company rules – he had to wear branded uniform, hire a branded van and deliver his services personally as he did not have an “unfettered right” to transfer work given to him to a substitute. He was also expected to work five days a week with a minimum of 40 hours.

In 2010, Smith suffered a heart attack and asked the company if he could cut his hours from five days to three. Pimlico said no and took back the van he had hired.

Smith took the company to the Employment Tribunal, arguing that he was entitled to basic workers’ rights.

Today, the Supreme Court ruled Smith was a ‘worker’ under s.230(3)(b) of the Employment Rights Act 1996.

Reaction

Reacting to the decision Mullins said, “I'm supposed to say I'm disappointed that the Supreme Court has ruled against Pimlico Plumbers. In reality I am disgusted by the approach taken to this case by the highest court in the United Kingdom.

“The five judges had the opportunity to drag our outdated employment law into the 21st Century, but instead they bottled the decision, and as a result thousands of companies across the UK, who use contractors in an honest and responsible way, remain exposed to huge potential claims in the future.”

Mullins added, “This case was never about exploitation of so-called 'gig economy' workers, this was about a highly-skilled, self-employed plumber, who was earning a six figure salary, wanting to have his cake and eat it!”

Meanwhile, Frances O’Grady, general Secretary of the Trades Union Congress, said the case has “exposed how widely sham self-employment has spread”, warning that “bad employers are using every trick in the book to deny staff basic rights”.

“It’s time to end the Wild West in the gig economy,” she added, “The government must get tough on rogue bosses and give unions the right to organise in more workplaces.

“People shouldn’t have to go to court to get a fair deal at work. Companies that treat their staff like disposable labour must be brought to book.”

However Susannah Kintish, employment partner at Mishcon de Reya and who has been leading the case for Pimlico Plumbers against Smith, pointed out that the judgment does not lay down any new principles of law around worker status.

"The Supreme Court Justices have made it clear that this judgment is very specific to the unique facts of the case. 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.”

James Murray, employment associate at Kingsley Napley, argued that this was one of the most significant employment status decisions in the last five years.

“The question is whether it will make a practical difference for the majority of gig economy workers given the high cost of enforcing their rights.

“Employers may tweak their contracts but they will not feel they need to alter the reality of their practices considering the government has said it is not willing to move forward with certain of Matthew Taylor’s more game-changing proposals, for example, reversing the burden of proof in favour of workers. Parliament is also pre-occupied with Brexit for the foreseeable future,” he said.

Rebecca Long Bailey, Labour’s shadow business secretary, called the ruling “a landmark victory for workers who have had enough of precarious conditions”.

“Pimlico Plumbers and companies like it must put an immediate end to exploitative practices and ensure that their workers have full access to their legal rights, such as the minimum wage and sick pay.”

The Association of Independent Professionals and the Self-Employed also welcomed the decision and urged government to write into law a positive definition of what constitutes self-employment.

“This would send a clear signal about who is and who isn’t self-employed, and would mean that people wouldn’t have to go all the way to the Supreme Court to get a resolution,” said IPSE ‘s director of policy Simon McVicker.

The Freelancer & Contractor Services Association claimed the case is “set to change the employment landscape forever”, while calling on the government to ensure there are no unintended consequences from any decisions made which might penalise those people who are genuinely self-employed.

Howard Hymanson, employment partner at Harbottle & Lewis, said the case “entirely predictably concluded in layman’s terms that ‘you can’t have your cake and eat it’.”

He added, “The problem remains, however, that in many atypical working relationships where the precise nature of the relationship is often not clear, many individuals, particularly those who are new to the world of work, remain open to be exploited as they understandably will lack a clear understanding of what employment/worker status actually means.”

The law firm Stevens & Bolton explained that the circumstances in the Pimlico case were different from those in the Deliveroo case.

In that case, Deliveroo’s riders were deemed not to be workers because of the riders’ freedom to provide substitutes for their delivery jobs. However at Pimlico, plumbers had only a limited right to substitute, with any substitute needing a direct contractual relationship with Pimlico.

Boma Adoki, employment law expert and associate at the firm, explained that “Although this decision is significant, we cannot assume that all subsequent cases on worker status will have the same outcome, as each case will consider the specific facts and working arrangements in place.

She added that this means there will likely be considerable uncertainty as to whether or not an individual is a worker.


Topics