The issue of who is an ‘employee’, who is a ‘worker’ and who falls into neither camp is clearly going to be one of the big issues of 2017. Following on from the Uber and Deliveroo cases we highlighted in our November 2016 bulletin, headlines were made recently by the case of Pimlico Plumbers Ltd v Smith in which a plumber is claiming that he should be able to bring a range of employment law claims even though his contractual documentation stressed that he was self-employed.
Mr Smith was engaged by Pimlico Plumbers in 2005. Many of the features of his work were clearly inconsistent with being employed under a contract of employment. He was responsible for purchasing his own raw materials, for example, and was able to charge a ‘mark-up’ to the company when he used them in the course of his work. He also took full advantage of his self-employed tax status by setting off a considerable amount of his earnings as expenses, and was registered for VAT. It could not have been a surprise that the employment tribunal ruled that he was not an employee and could not bring a claim for unfair dismissal.
However, the tribunal went on to find that he could bring claims under the Equality Act 2010 on the basis that he was disabled – and also claim holiday pay under the Working Time Regulations 1998. To bring these claims Mr Smith did not need to show that he had a contract of employment, merely a contract which required him ‘personally’ to do work for Pimlico Plumbers and under which they could not be regarded as a client or customer of his own business undertaking.
In reaching the conclusion that Mr Smith did indeed meet this test (which made him a ‘worker’ under the Working Time Regulations 1998 and an ‘employee’ under the Equality Act 2010) the tribunal found that there was an on-going obligation on Mr Smith to provide his services personally – indeed it was expected that he would do so on a full-time basis. He was not able to compete freely with Pimlico Plumbers by doing work for other firms or customers and that indicated that he was not ‘in business on his own account’.
On appeal to the Court of Appeal, Pimlico Plumbers argued that there was no real obligation on Mr Smith to do his work ‘personally’ and that he could have engaged someone else to do it on his behalf. The Court rejected this. The most that could be said was that Mr Smith could arrange for other operatives to cover his work if he had another job to go to. That fell far short of a ‘right of substitution’ that would indicate that there was no obligation on Mr Smith to provide personal service.
Pimlico Plumbers also argued that Mr Smith was actually engaged under a series of individual assignments rather than under one continuous contract under which he worked full-time. They argued that the tribunal had therefore been wrong to find that Mr Smith was not in business on his own account. The Court of Appeal rejected this line of argument as well. A number of fixed expenses were deducted from Mr Smith’s pay and so Mr Smith had to work a certain number of hours to make the work worthwhile for both parties. The tribunal had been entitled to find that there was a continuing obligation on Mr Smith to work for Pimlico Plumbers. The appeal was dismissed.