The Supreme Court have rejected a landmark appeal by Pimlico Plumbers over the employment status of a plumber. This is likely to have a major impact on the rights of many people classified as independent contractors in the gig economy.
Mr Smith worked solely for the company for nearly 6 years. He was required to wear a uniform and rent a branded van. He retained control over his working hours and the jobs he took. Following a heart attack he tried to reduce his working hours. When Pimlico refused to do this, he brought claims for unfair and wrongful dismissal, pay during medical suspension, a written statement of employment particulars, disability discrimination (direct and arising from disability), a claim of failure to make reasonable adjustments, holiday pay and unauthorised deductions from wages. The EAT and Court of Appeal dismissed Pimlico’s appeals.
The Supreme Court was asked to consider an appeal by Pimlico Plumbers in relation to the question of whether their plumbers could claim to have a ‘worker’ status despite being termed as ‘self-employed operatives’ in their contracts. The company argued that Mr Smith had the option to substitute someone else to carry out his work. However, the court held that one of the dominant features of Mr Smith’s contract was that he must carry out the work himself and that any substitute must be a Pimlico operative. The court unanimously dismissed the appeal. It found Mr Smith qualified as a worker under the Employment Rights Act 1996. He was therefore entitled to rights such as holiday pay and protection against unlawful deductions from wages and discrimination.
The case will now be transferred to the tribunal to determine his unlawful dismissal claim.
According to the McKinsey Global Initiative there are 5 million people working in the gig economy in the UK. Since the financial crisis, increased competition for work has forced people to come up with new ways of earning. Organisations such as Uber and Deliveroo allow individuals the flexibility to decide when to work and for how long to work. However, the economy has been referred to as a “vulnerable human underbelly” as companies classify individuals as self-employed in this sector to exploit them and avoid paying minimum wage, pensions and granting holiday rights.
The decision could suppress the gig economy as companies who employ contractors are likely to be cautious in the way they engage them in order to minimize the risk of such claims and many individuals who rely on such work will be deprived of their livelihood.
If you engage people on zero hour contracts or are unclear in what capacity you have hired them, it is important for you to have your contracts reviewed in order to determine how they may be construed by the courts and what your obligations may be. If you have any queries, please contact us at [email protected].