Self-employed, contractor, worker, employee…? The ever evolving gig economy
The case of Pimlico Plumbers & Charlie Mullins v Gary Smith has attracted much press coverage over the weekend and hit a number of headlines. Whilst we are all familiar with the basic summary (self-employed plumber found to be a worker based upon reality of situation, as opposed to what was stipulated in the contract) – what implications does such a finding have on employers trying to keep up with ever changing employment legislation and the evolving gig economy?
Gary Smith (GS) worked for Pimlico Plumbers (PP) for six years before suffering from a heart attack in 2011 and being dismissed. As a result of the termination he brought claims of unfair and wrongful dismissal at the Employment Tribunal. The Employment Tribunal found that GS was not an employee, but that he would come under the definition of a worker and therefore be entitled to receive certain benefits. PP appealed the decision to the Employment Appeal Tribunal (EAT), which was dismissed. The Court of Appeal (CoA) dismissed the further appeal by PP and upheld the finding that GS was a worker whilst engaged by PP.
GS signed an agreement with PP on 25 August 2005, throughout which GS was referred to as a ‘sub-contracted employee’ (the 2005 agreement). A subsequent agreement was signed in September 2009 (the 2009 agreement), which identified the contract as a ‘self-employed operative’ agreement. Whilst GS was described internally within PP as an independent contractor, the 2005 agreement stated that GS would have to wear a uniform and drive a hired van branded with the PP logo, work a five day working week consisting of a minimum of 40 hours and would have to liaise with PP in relation to any holiday or time off (obligations which are generally more consistent with worker status). The 2009 agreement outlined similar provisions in more detail and did not specify that the 2005 agreement was no longer valid.
The deciding factor centred around GS’s obligation to personally provide services. Within the 2009 agreement GS undertook to provide his services personally; there was no express right of substitution or delegation. Whilst it was argued by PP that their operatives had the implied right to provide a substitute to carry out the services if they chose not to, it was decided that in practice, operatives would swap jobs around in order to deal with work distribution and further, this did not amount to a formal right of substitution, as PP were under no legal obligation to tolerate such practice.
As a result, GS was found to be a worker as he was required to personally provide services; work a set number of hours on agreed days and was restricted in relation to other work he could carry out of a competitive nature.
Charlie Mullins (founder and owner of PP) has said that “we will be looking at the full judgment and there is a good chance we will appeal to the Supreme Court” however; this recent decision cannot be ignored.
Coming just three months after Uber drivers were deemed not to be self-employed and Deliveroo contractors having also challenged their status; it is expected that the case of Pimlico Plumbers will be relied upon in Uber’s appeal to the EAT. What is noteworthy is the CoA’s statement that LJ Underhill did not find the case entirely straightforward; the case is fact sensitive however, it acts as a further reminder that the courts will insist upon going behind the contractual terms in order to assess the reality of the situation when it comes to employment status. Therefore going forward, companies should ensure that their contractual terms reflect the reality of a situation, even if this means regularly updating contracts, as a judge will certainly look at the facts if the relationship turns sour.
One thing we can know for certain is that this is likely to be a leading case on employment status in future years.