The Supreme Court has dismissed the latest appeal by Pimlico Plumbers Ltd (the Company) against the employment tribunal’s decision that one of its plumbers, Mr Smith, was a “worker” under the provisions of the Employment Rights Act 1996 (ERA) and the Working Time Regulations 1998 (WTR). The Supreme Court held that, on the facts of the case, Mr Smith satisfied the key elements of worker status in that he undertook to carry out work personally for the Company and that the Company was not in the position of a client or customer of a business carried on by him.
There are three levels of employment status in the UK: self-employed, worker and employee. Self-employed individuals are not entitled to the same employment protections as workers and employees, and so, for example, are not entitled to protection from unlawful deductions from wages under the ERA or to paid annual leave under the WTR. Mr Smith brought a claim before the employment tribunal claiming that, although his contract described him as an “independent contractor” and he was registered for VAT, submitted invoices to the company and filed tax returns on the basis that he was self-employed, he was in fact a worker and therefore entitled to those rights.
The employment tribunal held that Mr Smith was a worker. The Company appealed to the Employment Appeal Tribunal, and then the Court of Appeal, both of which dismissed their appeals. The Company then appealed to the Supreme Court which delivered its judgment on 13 June 2018.
Supreme Court judgment
On the facts of the case, the key elements which determined Mr Smith’s status as worker rather than self-employed were:
– personal service (proven by the lack of an unfettered right of substitution); and
– the fact that Mr Smith did not provide his services to the Company as a client or customer of a business carried on by him.
On these points, the Supreme Court agreed with the tribunal that Mr Smith had no unfettered right to substitution (Mr Smith in effect only being able to substitute himself with another Pimlico plumber). This limited right of substitution was not therefore inconsistent with the requirement of personal service for worker status.
On the second point, the Supreme Court held that, in spite of the fact that Mr Smith was entitled to reject work and was free to take on outside work and provided his own tools, the employment tribunal had been entitled to consider a number of factors as strongly indicating that the Company was not a client or customer of Mr Smith. These included the requirement that he wear a branded uniform, drive a branded van, carry an identity card and closely follow the administrative instructions of its control room; the severe terms as to when and how much the Company was obliged to pay him; the contractual references to ‘wages’, ‘gross misconduct’ and ‘dismissal’ in the documentation; and the suite of restrictive covenants regarding his working activities following termination.
So, on balance, the Supreme Court could see no reason to overturn the tribunal’s original decision that Mr Smith was a worker. He could therefore pursue his claims for unlawful deductions from wages and for holiday pay.
Whilst this decision may provide a useful indication of what particular factors may decide an individual’s employment status (and consequent rights), each case, as always, will turn on its particular facts.