The Court of Appeal has dismissed an appeal by Pimlico Plumbers by upholding that plumber Gary Smith is a worker rather than a self-employed contractor, entitling him to workers’ rights such as access to reasonable adjustments and holiday pay.
In the case of Pimlico Plumbers and Charlie Mullins v Gary Smith, Smith originally brought the case to the Employment Tribunal (ET) in 2012, claiming that he was unfairly or wrongfully dismissed by Pimlico Plumbers in May 2011 following a heart attack in January 2011. Smith had worked for Pimlico Plumbers exclusively between August 2005 and April 2011.
The ET found that Smith was employed as a worker rather than as a self-employed contractor. Following the ET’s ruling, Pimlico Plumbers and Mullins, chief executive at the organisation, appealed and Smith cross-appealed to the Employment Appeal Tribunal (EAT). The appeal and cross-appeal were both dismissed.
Although Smith had some flexibility over the hours he worked, and was treated as a self-employed individual for tax and VAT purposes, the ruling found that measures laid out in an employment agreement between Smith and Pimlico Plumbers, originally in 2005 and then in an updated version in 2009, indicated that Smith was a worker.
Under section 230 of the Employment Rights Act 1996, a worker is defined as an individual who has entered into or works under a contract of employment or any other contract whereby the individual undertakes to do or personally perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer.
The 2005 agreement between Smith and Pimlico Plumbers stipulated that Smith would have to wear a uniform and drive a hired van carrying Pimlico Plumbers' logo, work a five-day working week consisting of a minimum 40 hours, and would have to liaise with Pimlico Plumbers regarding any annual leave or time off. The 2009 agreement outlined similar guidelines in more detail, although it did not state that the 2005 agreement was no longer applicable.
The Court of Appeal ruling upheld the ET’s previous decision. It maintained that Smith was a worker because he provided work personally for Pimlico Plumbers, was obliged to work a set number of hours on agreed days, and that there was a high degree of restriction on Smith’s ability to work in a competitive situation, which suggested that he was not in business on his own account.
Charlie Mullins OBE, chief executive officer at Pimlico Plumbers, said: “Gary Smith was a self-employed contractor carrying out work for Pimlico Plumbers for about six years, and during that time was very happy to take advantage of all the tax benefits of being self-employed, including being VAT registered, paying low corporation tax rate on his earnings, and claiming tax relief on such things as office space and employing his wife. Mr Smith was also not paying tax on a PAYE basis at 45p in the pound, which is one of the major features of the ‘worker’ status.
“As [an organisation] Pimlico Plumbers was very unhappy with the judgement handed down by the Court of Appeal last week, and is studying the judgement, with a view to appealing the decision to the Supreme Court.
“Pimlico Plumbers is also very upset that various interested parties have chosen to conflate highly-skilled trades people, earning large sums in excess of £100,000 per annum, and in some case more than £200,000, with parts of the gig economy, who are paid far less and who have far less commercial clout and options, in terms of choosing how they are paid and what benefits they wish to receive."
Emma Burrows, partner and head of the employment department at Trowers and Hamlins, said: “The decision in Pimlico Plumbers is another in an ever-expanding line of case law which shows that although an employer may seek to impose a model of self-employment which gets round the rights that employee or worker status confer, the reality of the situation will always prevail.
“Working practices are being subjected to increasing scrutiny by the courts. This is, in part, due to the rise of the flexible business models employed by the gig economy. Decisions in the recent Uber and CitySprint cases, dealing with taxi drivers and bicycle couriers, have shown the courts to be intensely critical of contractual arrangements which purport to impose self-employed status but which do nothing to reflect the reality of the situation.”
Rachel Farr, senior employment lawyer in the employment, pensions and mobility group at Taylor Wessing, added: “The judgement of the Court of Appeal will be relevant to the decision in the forthcoming EAT appeal by Uber and to all other gig economy employment status cases in the news at present.”
