Landmark Supreme Court Judgment on Contractor Employment Status

Pimlico Plumbers Ltd & Mullins v Smith

Are you currently working as a self-employed contractor? Or does your business regularly employ contractors? If so, then a recent Supreme Court judgment may make you reconsider the details of your contracts and relationships.

Contracts drawn up between self-employed contractors and their clients can vary a great deal, particularly in terms of obligations, conduct and status. Their wording can have significant consequences for all parties involved, should the unfortunate happen and a legal disagreement occur.

This is where having direct access to a specialist employment barrister can prove indispensable. Having expert assistance when drawing up contracts can help ensure that they layout clearly and unambiguously the employment status, rights and obligations of any contractors. With the rise of the gig economy, this is more important than ever before.

Self-employed or employee?

The case in question involved a Mr Smith, a plumbing and heating engineer who carried out work for Pimlico Plumbers (a large London-based plumbing company) between 2005 and 2011.

Mr Smith suffered a heart attack in January 2011, and asked to work three days per week instead of five. Pimlico Plumbers refused his request, and took away the branded van he was hiring from them. Shortly thereafter Mr Smith claimed he was unfairly dismissed. The case went to employment tribunal. This was despite the fact that Mr Smith had registered and presented himself as a self-employed contractor for those 6 years.

On the face of it, Mr Smith was a contractor, and Pimlico Plumbers was the client. However, once the Tribunal investigated the details of Pimlico Plumbers’ business model and contract they found it exerted significant control over Mr Smith. For example, he was required to do a certain number of hours’ work per week and to use a Pimlico Plumbers van while doing so. He also worked exclusively for Pimlico Plumbers.

However, Mr Smith was able to reject jobs, negotiate pay and decide on his working hours.

The Tribunal decided that due to the control Pimlico Plumbers had over him, Mr Smith was legally a ‘worker’ rather than a self-employed contractor. Both the Employment Appeal Tribunal and the Court of Appeal agreed.

This meant that Mr Smith was able to bring about legal action against Pimlico Plumbers relating to disability discrimination, holiday pay and wage deduction.

Pimlico Plumbers took the case to the Supreme Court for further appeal. Yet in what will likely become a leading authority on employment status, the Court upheld the judgment that Mr Smith was indeed a worker. The case for unfair dismissal will therefore go ahead.

Keeping up with the gig economy

The general secretary of the Independent Workers Union of Great Britain, Jason Moyer-Lee, says the rise of the gig economy means the issue of employment status is more important than ever.

Moyer-Lee has so far praised the courts, saying that they are “keep[ing] up with the times” by declaring individuals to be workers and therefore entitled to “minimum wage rights and holiday pay.” The recent ruling by the Supreme Court signifies another big step towards clarification of the law in this growing area.

Careful analysis of working relationships is key. The wording of your contracts may not be enough to establish the relationship as one or the other. The obligations of personal performance that are placed upon a self-employed contractor may in fact make them a ‘worker’ in the eyes of the law.

How Direct Access can help

If your business employs contractors regularly, then it’s a good idea to have an expert in employment law scrutinise and review your contracts and working relationships to ensure they are clear and appropriate.

If you’re a contractor and feel that you may have signed a contract that classes you as self-employed, therefore forgoing certain rights, yet exerts a lot of control over your performance, then it’s worth getting a barrister to assess it. Magdalen Direct Access will put you in touch with an expert in employment law, who can provide you with clear and sound advice over how to negotiate a more honest working relationship.

Involved in a potential tribunal case? Our Direct Access barristers can assess your situation, help you understand your rights and obligations and guide you towards the best course of action. If you need expert advice or representation for any employment related issue, talk to our friendly clerks today to find out how Magdalen Direct can help.