In a case likely to significantly affect gig economy workers’ rights, the issue of a plumber’s employment status will be heard by the Supreme Court today (20 February).
The appeal centres on plumber Gary Smith, who between 2005 and 2011 worked exclusively for Pimlico Plumbers on a self-employment contract, and will decide whether he is an independent contractor, or a worker with certain rights.
As the first consideration by Britain’s highest court of the rights to which gig economy workers are entitled, the Supreme Court’s decision may affect around 15 per cent of the working population currently reported to be on insecure contracts in the UK.
Smith brought an employment tribunal case in August 2011, claiming that he was unfairly or wrongly dismissed. He also claimed direct disability discrimination, discrimination arising from disability and failure to make reasonable adjustments. At a pre-hearing review, the tribunal addressed whether the respondent was an employee or worker.
Smith was expected to work a five-day week of at least 40 hours for Pimlico, wear the company uniform, hire its branded van and personally complete his work, without any ‘unfettered right’ to substitute his work to another.
As an independent contractor, he provided his own equipment, accepted personal liability for his work and was covered by his own insurance.
After Smith suffered a heart attack in 2010 and sought to reduce his working hours to three days a week, Pimlico refused and removed his hired company van, labelling him an independent contractor. It argued that he was registered and paid tax on a self-employed basis and worked with Pimlico on his own terms. Smith, however, successfully claimed that he was entitled to basic workers’ rights, and the tribunal was entitled to hear all of his claims.
The tribunal found that Smith’s relationship with Pimlico was one of employment under section 83(2) of the Equality Act 2010, and he was therefore a ‘worker’ within the meaning of section 230(3)(b) of the Employment Rights Act 1996.
Pimlico and its CEO, Charlie Mullins, appealed the decision to the Employment Appeal Tribunal (EAT) and the Court of Appeal. In February 2017, the Court of Appeal upheld the tribunal and the EAT’s findings that Smith was a worker, which meant he was entitled to basic employment rights, including holiday pay and the national minimum wage.
It did not, however, find him to be an employee. A ‘worker’ has intermediate status – undertaking to perform work or services personally, but without carrying on a business undertaking of which the would-be ‘employer’ is his or her client.
This week’s hearing before Lady Hale, Lords Wilson, Hughes and Lloyd-Jones and Lady Black, will reconsider whether Smith was a 'worker' within the meaning of the Employment Rights Act and regulation 2 of the Working Time Regulations 1998, and whether he was in ‘employment’ within section 83(2)(a) of the Equality Act.
The decision could have implications for other employment status cases currently in the English courts, including appeals involving CitySprint cycle couriers’, Deliveroo cycle couriers’ and Uber drivers’ attempts to obtain workers’ rights through union recognition.
Purvis Ghani, employment partner at Stephenson Harwood, told People Management that the case was a “timely reminder of the significance of employment status for many businesses in the UK. If the Court of Appeal's decision is overturned, this could have significant ramifications for the wider economy, including many businesses that use independent contractors that operate outside of the gig economy.
“It would be surprising if the Supreme Court took a different view – although it could provide further guidance that might help businesses to navigate this tricky area in future.”
Blair Adams, partner at law firm Wedlake Bell, said: “This could be a very important decision on the question of self-employment vs worker status, affecting both technology-based ‘gig’ economy businesses and more traditional companies.
“False self-employment continues to be attacked by the courts on a number of fronts, as shown by the recent tax tribunal decision on the use of a PSC by a BBC presenter,” he said. Former BBC presenter Christa Ackroyd was caught by the IR35 tax rules. Found by HMRC to be an employee, not a contractor, she was ordered to pay a tax bill of more than £400K.
The Supreme Court hearing may also impact on the government’s consultation in response to Matthew Taylor’s Good Work: The Taylor Review of Modern Working Practices. Taylor suggested that a new category, ‘dependent contractor’, could replace the term ‘worker’.
On 7 February, the government said that, before changing workers’ rights, it would consult further with businesses on employment status. This would “make it easier for both the workforce and businesses to understand whether someone is an employee, worker or self-employed – determining which rights and tax obligations apply to them”.
Employment status has been described as a notoriously complex area, in which there is inconsistency.
The Supreme Court and the government have disagreed on employment tribunal cases. Last year, the court overturned the government’s 2013 employment tribunal fees directive, finding that fees regime was unlawful and discriminatory.
Mullins described the Pimlico case as “groundbreaking”. He said: “The country needs clarity on this issue of whether someone is a worker or self-employed. The outcome will affect lots of businesses. It’s not just about us.”
Harry Abrams, solicitor at Seddons, said that following King v The Sash Window Workshop Ltd and Ors, a Supreme Court confirmation of worker status in the Pimlico case may result in such companies having to pay unpaid holiday going back indefinitely.
A judgment from the hearing, listed for two days, is expected in March.