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Pimlico Plumbers decision – that puts a spanner in the works!

Amidst media hype, and recent cases on employment status in the gig economy, another case has been reported which puts a spanner in the works for companies arguing that they engage “self-employed contractors” and not workers.  The Court of Appeal upheld the EAT decision that Mr Smith, who was a plumber for Pimlico Plumbers Limited (PP), was a worker, rather than a genuinely self-employed contractor. 

There were many features of a self-employed contractor relationship in existence between the parties and it was noted that until the Claimant brought his claim, both parties had believed it was a self-employed contractor relationship.  For example, the Claimant invoiced on a monthly basis for the work that he had undertaken for PP, bought his own tools and had discretion as to how and when work was accepted and completed.  However, the contractual provisions were not ideal and contained within two separate agreements which described Mr Smith as a “self-employed operative”.  Many of the provisions in the contract implied more of an employment relationship, including the requirement for Mr Smith to wear uniform, personal conduct guidelines for him to abide by and a requirement that he use a company branded vehicle.

As a result of the various claims pursued by Mr Smith, the preliminary issue was to determine whether he was an employee, worker or a self-employed contractor of PP.  The judgment was clear that, based on a long line of authorities, based on the lack of mutuality of obligation Mr Smith was not an employee.  The Court of Appeal focused on whether there was a requirement for Mr Smith to provide personal service to PP.  The contractual arrangements to which Mr Smith and PP were subject did not contain an express right of substitution or delegation.  In evidence there was no practice of a plumbing engineer like Mr Smith substituting work to an external plumber of his choice.  Therefore Mr Smith was found to be a worker and for the purposes of his discrimination claims, an employee under the wider definition contained in section 83 of the Equality Act 2010.

In cases like this when the contractual provisions are far from watertight, the Courts look at the practices on the ground to “flush out” the reality of the circumstances and determine whether the contractual arrangements are a sham. 

In related news, the Department for Business, Energy and Industrial Strategy (BEIS) has published a report entitled “Employment Status Review”.  The report was produced back in March 2015 and updated in December 2015 but has been published to inform the Taylor Review of modern employment practices.  The report remains highly relevant in view of the current focus on the gig economy.  It seems we are awash with cases on employment status and with the Taylor review, this case is unlikely to be just another a flash in the pan.

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further