Introduction
On June 13th 2018, the Supreme Court dismissed Pimlico Plumbers’ appeal in the widely publicised case of Pimlico Plumbers Ltd vs. Smith. The appeal was to ascertain the employment status of plumber Gary Smith. Smith had been in a contractual working arrangement with Pimlico Plumbers between August 2005 and April 2011. It is thought that the ruling may have wide reaching ramifications for both employers and workers across a number of industries and likely those in the creative sector.
What happened?
In August 2011, Smith issued proceedings against Pimlico Plumbers in an employment tribunal, alleging unfair dismissal, unlawful deduction of wages, non-payment for annual leave and discrimination on the grounds of disability against the London company. Whilst the tribunal decided that Smith ‘had not been an employee under a contract of employment, and therefore that he was not entitled to complain of unfair dismissal’, they did conclude that ‘Mr Smith (i) was a ‘worker’ within the meaning of s.230(3) of the Employment Rights Act 1996, (ii) was a ‘worker’ within the meaning of regulation 2(1) of the Working Time Regulations 1998, and (iii) had been in ‘employment’ for the purposes of s.83(2) of the Equality Act 2010.’
Following unsuccessful appeals against this ruling to an appeal tribunal and then the Court of Appeal, Pimlico Plumbers took their case to the Supreme Court. They disputed that Smith was ever more than a contractor for the firm. They argued that as a self-employed contactor, he was not entitled to the same benefits of a regular Pimlico Plumbers employee and appealed to the Supreme Court to this end. Last Wednesday, the court rejected their appeal and in light of the contractual agreements between Smith and Pimlico Plumbers, ruled that the employment tribunal had been correct to in naming Smith as a ‘worker’ for the company. Smith’s employment tribunal may now go ahead.
What does this mean?
Whilst this does not represent a change in the law, it is being viewed, by some, as a landmark ruling and one which may have potential ramifications for businesses using ‘self-employed’ contractors in the future. The ruling comes in the wake of the 2017 ‘Taylor Review’ into the gig economy which concluded that ‘we should be clearer about how to distinguish workers from those who are legitimately self-employed’. Following this, in February 2018, the government pledged an overhaul of worker rights, and to take on almost all of the Taylor Report’s recommendations in a bid to improve the rights of workers, including those in the gig economy.
This is of significance to the creative industries, where 43% of the current UK industry’s workforce are registered as ‘self-employed’ and 78% of its businesses employ 5 people or less. Pimlico Plumbers Ltd vs Smith illustrates the importance of recognising and abiding by the legal parameters for the employ of both workers and self-employed contractors and the difficulties that may arise for all parties when these are not followed. It is advisable, therefore, that organisations pay closer attention to the kinds of working relationships they pursue with their employees or external contractors and understand their legal obligations towards both. Similarly, it is important the employees and self-employed contractors understand exactly how it is they are being employed and are aware of the ways in which the law can protect them from potential exploitation and guarantee their rights.
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Thank you to Felix Tambling for his research for this article.
Photo by Sebastian Pichler on Unsplash