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Pimlico Plumbers and the impact on employment status

Employment law specialist Nigel Mackay and Hannah Reid discuss the Court of Appeal's recent decision in favour of plumber Gary Smith in his case against Pimlico Plumbers

Posted on 15 February 2017

The Court of Appeal’s recent decision in favour of plumber, Gary Smith, in his case against Pimlico Plumbers is another clear message to employers that describing staff members as self-employed contractors will not prevent them from claiming workers’ rights. 

This case follows the employment tribunal decisions in favour of Uber drivers and a City Sprint courier and shows again that workers in the ‘gig economy’ are entitled to the same rights as any other worker. Similar claims are also being brought against Deliveroo and Addison Lee.

The Pimlico Plumbers case involved a plumber who requested that his hours were reduced after he suffered a heart attack. This request was refused, which led him to bring a claim that he had been unfairly dismissed. He also claimed disability discrimination, holiday pay and arrears of pay.

In order to claim unfair dismissal, Mr Smith had to show that he was working under a contract of employment, in other words, that he was an employee of Pimlico Plumbers. For the remaining claims he had to show he was a worker for the purposes of the Employment Rights Act 1996 (or met the definition of employment in the Equality Act 2010, a similar although not identical test).

In considering these types of claims, employment tribunals first consider if there was a contract to work personally. If so, they then go on to consider whether that is a contract of employment, a “worker” contract or a self-employed independent contractor contract.

A crucial element of whether there is a contract to work personally is whether there is a right to send a substitute to work instead of you. The judgment has provided useful clarity on this issue, summarising the position as follows:

  1. An unfettered right to substitute another person to do the work is inconsistent with a contract to work personally.
  2. A conditional right to substitute may or may not be inconsistent with personal performance depending on what the conditions are.
  3. A right of substitution only when the contractor is unable to carry out the work will, subject to exceptional facts, be consistent with personal performance.
  4. Substitution limited only by the need to show that the substitute is qualified will generally be inconsistent with personal performance.
  5. A right to substitute only with the consent of another person who has absolute discretion to withhold consent will be consistent with personal performance.

In this case, the employment tribunal found that there was no right of substitution and the Court of Appeal agreed. Therefore, it found that there was a contract to work personally.

The next step was to deal with what type of contract it was. 

In addressing this question, employment tribunals consider all of the factors, including control, integration and subordination to determine which status applies to a particular individual. 

It is generally considered easier for individuals to show that they are at least a worker, than to meet the test of being an employee, although there is little case law on how the line is drawn between the two types of status.

In the Pimlico Plumbers case, the employment tribunal had found that Mr Smith was a worker but did not meet the test of being an employee. The Court of Appeal confirmed that Mr Smith was a worker but did not make any finding on his status as an employee, as Mr Smith did not appeal against the employment tribunal’s finding on this point. 

There was therefore a lost opportunity for further clarity to be provided as to how to differentiate between the two types of status. In reality, it will often be arguable that if an individual meets the criteria for being a worker, then they will also be an employee. This is an issue that is likely to come before the tribunal again soon.  

What is clear from the judgment is that companies should be wary of the image they are portraying to the public regarding the relationship they have with their workforce. In this instance, it seems that the court considered that if Pimlico Plumbers requires you to look like you work for Pimlico Plumbers and act like you work for Pimlico Plumbers, then it is likely that you are working for Pimlico Plumbers. 

The fact that Mr Smith was wearing a branded uniform and had to provide work to the standards of the company was an important relevant factor in this case, as was the fact that customers made payments to Pimlico Plumbers rather than the individual plumber. 

The simple fact is that any customer would be under the impression that the person in their house works for Pimlico Plumbers. In such cases, it is difficult to argue that the plumbers do not work for the company.

This latest decision is a further victory for workers and demonstrates again that the direction of travel of cases such as these is in favour of workers’ rights. The company has said that it is considering an appeal to the Supreme Court, where it is hoped that further confirmation will be provided that you cannot deny your workers their basic rights by labelling them as self-employed.