By way of a very brief re-cap to this long running worker status case, Mr Gary Smith commenced work for Pimlico Plumbers in August 2005 and worked solely for them until he was released from service on 3 May 2011. During this time Pimlico Plumbers gave him a contract that labelled him as an independent contractor.
After being released, Mr Smith made a number of claims to the employment tribunal to try and flush out whether he was indeed an independent contractor and therefore self-employed or whether he was an employee.
Mr Smith took the final plunge with his claim against Pimlico Plumbers where the Supreme Court held that he was indeed a worker under the Employment Rights Act 1996, Working Time Regulations 1998 and an employee for the purposes of the Equality Act 2010.
The Supreme Court
The Supreme Court agreed with the tribunal and courts before it in finding that:
- Mr Smith undertook his work personally, which is one of the key elements of being classed as a worker. Whilst he had the right to send a substitute, this was only for another Pimlico Plumber, who would also be engaged on the same restrictive terms as Mr Smith. He could not substitute another worker of his own choice
- The over-arching (or umbrella) contract between Mr Smith and Pimlico Plumbers, requiring Mr Smith to be available for work meant that Pimlico Plumbers were not a client or customer of his on an arms length contractor – client basis. This also negated the financial risk that Mr Smith carried in being able to reject work
- Pimlico Plumbers controlled a number of ways in which Mr Smith worked, for example, they required him (personally) to be available for work 40 hours a week, wear a Pimlico Plumber’s uniform, drive their branded van, how he conducted his administrative duties and how he was paid.
There is no single factor that will determine whether an individual is an employee or worker as opposed to self-employed. Instead, as we see in Pimlico Plumbers, it is a mixture of factors.
It is also clear that there has been a shift in the way in which tribunals and courts approach questions of status. Organisations are no longer safe, hiding behind a well crafted contract setting out arrangements that look as if they are independent contractor contract; instead, the tribunals will look at the factual circumstances of the relationship between the parties, in addition to looking at whether the contract matches the reality.
So, if you rely on independent contractors to support your business and deliver your services, then now is a good time to review the way in which your organisation engages with people, looking in particular at the following:
- Does the individual have to conduct the work personally? Or can they send a substitute? If so, is this an unqualified unlimited right?
- When the individual is offered work, are they required to do that work personally and only they can do that work, no one else?
- How much control does your organisation exert over the individual?
- Is the individual integrated into your organisation?
The first 2 questions will determine if the contractor is a worker or not and if so, they will have the right to receive statutory sick pay and paid holiday. The first two and last two questions will determine whether the contractor is an employee and if so they will benefit from the myriad of employment law rights including maternity leave and pay and the right not be unfairly dismissed as well as statutory notice periods.
If you would like any assistance in reviewing your engagement with individuals and/or drafting new contracts to reflect how you engage with them, please do not hesitate to contact us.
Read the full case documents here: Pimlico Plumbers Ltd and other (Appellants) v Smith (Respondent)