In the week when the Department for Business, Energy and Industrial Strategy published an “Employment Status Review” paper that considered the balance between providing for individual employment rights and the needs of business, the Court of Appeal has handed down an important decision regarding self-employment and worker status. Employment partner Chris Thompson explores the details.
In the case of Pimlico Plumbers v Smith employment rights were claimed by Mr Smith even though he had signed a contract with Pimlico in which he agreed that he was self-employed and would provide his own tools and arrange his own insurance. However, it was also agreed that he would drive a Pimlico van; wear a Pimlico uniform; produce Pimlico invoices; work a 40-hour week and be contactable whenever on duty.
Claims had been brought for unfair dismissal and discrimination. The former claim could only succeed if he was an employee, whilst the latter required only that he was found to be a worker.
Pimlico disputed that he had a right to bring any employment claim as he was self-employed.
The Tribunal and the Employment Appeal Tribunal had both found that Mr Smith was not an employee but was a worker. This meant his claim of discrimination could proceed. Pimlico’s appeal against this has been rejected by the Court of Appeal.
It held that Mr Smith was a ‘worker’ and was entitled to bring claims in respect of discrimination. He was not an employee, nor was he self-employed and carrying on his own business by entering into contracts with clients and customers. He fell into a third category in that he was self-employed but provided his services as part of a business undertaking carried on by someone else.
In this category he could claim ‘worker’ rights and importantly was protected in relation to rights under the Equality Act 2010.
The argument that he should not be so protected because there was no obligation for him to personally provide work and that when he did it was on the footing of providing it to Pimlico as a customer failed.
It was relevant that there was no express provision permitting a substitute to be provided. The fact that sometimes outside assistance might be used and jobs were on occasion swopped between plumbers was not sufficient to establish an unfettered right of substitution.
The argument that he was providing services to a client also failed as it was taken into account there had been clear expectations about times of work and he was restricted in his ability to carry out other work. The arrangement did not suggest that Mr Smith was offering to do this work for his own customer or client but rather suggested that he was to be an integral part of Pimlico’s workforce.
This is an important decision given the numbers of organisations that have similar working arrangements and the growing number of challenges that have been reported in the so called ‘gig economy’. It follows hot on the heels of Tribunal decisions in ‘Uber’ and ‘Citysprint’ which all show a direction of travel which is concerning for businesses trying to operate a truly self-employed model.
Above all, it highlights the fact that just because an individual is providing work as a self-employed person, it does not necessarily follow that they will not have employment rights. There are a number of statutory rights that these may claim as a ‘worker’ of the contracting party, including national minimum wage, paid annual leave and protection against discrimination. This decision confirms there will be risk in every case so the need to ensure the contractual documentation does not conflict with the principle that the individual is carrying out their own business will be even more important going forward.
For further information, please contact:
Chris Thompson, partner, Employment
T: 0161 836 7935