Laura Macdonald | Senior Associate

Important Employment Status Case: Plumber Found to be a “Worker”

The Court of Appeal has recently handed down its Judgment in the case of Pimlico Plumbers and Charlie Mullen v Gary Smith. In this case, which will likely be a leading case on Employment Status in future years, the Court of Appeal upheld the decision of the Employment Tribunal and the Employment Appeal Tribunal that Mr Smith, a plumber, was a “worker” for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998, and not a self-employed contractor.

Pimlico Plumbers (PP) had engaged Mr Smith as a plumber for approximately five and a half years, and following his termination, Mr Smith raised claims in the Employment Tribunal, for which it had to firstly determine whether Mr Smith was:

  • an employee;
  • a worker; or
  • an independent contractor, and therefore genuinely self-employed.

In support of PP’s contention that Mr Smith was an independent contractor, and therefore self-employed, they referred to the contractual documentation which stated that:

  1. Mr Smith was an independent contractor of PP (which Mr Smith agreed in his evidence that he had considered himself to be);
  1. Mr Smith was under no obligation to accept work from PP, and it was not obliged to offer him any work, however there was a separate provision stating that Mr Smith should complete a minimum of 40 hours work per week (Mr Smith agreed in evidence that he could reject work);
  1. Mr Smith was subject to restrictive covenants;
  1. Mr Smith was provided with a PP branded van to drive and wore a PP uniform;
  1. Mr Smith provided his own materials and tools;
  1. Mr Smith bore a significant proportion of risk, in the event that a customer failed to make payment; and
  1. Mr Smith was registered for VAT, and submitted invoices to PP and filed tax returns on the basis he was self-employed.

The Employment Tribunal accepted evidence that the plumbers who were engaged with PP could swap job assignments between themselves, or bring in external contractors for any specialist job.

EAT Outcome

The Employment Tribunal determined that Mr Smith had worker status, which PP appealed. The EAT upheld this finding, and PP further appealed to the Court of Appeal.

The Court of Appeal, in upholding the decision that Mr Smith possessed “worker” status, summarised the relevant principles on personal service and these are summarised as:

  1. An unfettered right to substitute another person to do the work or perform the services is inconsistent with an undertaking to do so personally;
  1. A conditional right to substitute another person may or may not be inconsistent with personal performance, depending on the conditions. This will depend on the precise contractual arrangements in place, and in particular the extent to which a right of substitution is limited or occasional;
  1. When a right of substitution will only apply when the contractor is unable to carry out the work, and substitute with an appropriate specialist will be consistent with personal performance;
  1. When a right of substitution is conditional only on the requirement to show that the substitute is as qualified as the contractor to do the work, will be inconsistent with personal service; and
  1. When a right of substitution is only available with the consent of another person who has unqualified discretion to withhold consent will be consistent with personal performance.

Court of Appeal Ruling

Considering the facts of this case, the Court of Appeal found that the Employment Tribunal had been correct to find that, on proper interpretation of the contractual terms, Mr Smith undertook to provide his services personally. The contractual documentation contained no provision, providing an express right of substitution or delegation.

The Master of the Rolls highlighted that this case puts a spotlight on business models under which operatives are intended to appear to clients of the business as working for the business, but at the same time, the business itself seeks to maintain that the operative is an independent contractor, and self-employed.

This ruling is another in a series of decisions in relation to ”worker” status, and an increasing focus on worker status (following cases involving Deliveroo, Uber and City Sprint), and provides very useful guidance on establishing worker status.

PP has stated that it will consider appealing to the Supreme Court, however will require to obtain permission before it can do so.

This decision is likely to have a wide impact on the way similar businesses will treat their regular contractors. Despite Mr Smith in this case being VAT registered, paying tax on a self-employed basis, considering himself to be an independent contractor, providing his own equipment and accepting financial risk for the work he undertook, in circumstances where Mr Smith was expected to deliver his services personally, had no unfettered right to provide a substitute, and was expected to regularly work a minimum number of hours per week, it has still been found that he attracts the rights of a worker.

Therefore, as a worker rather than being self-employed, Mr Smith’s entitlements would include being paid the minimum wage, receiving annual leave, rest breaks and the right to pension contribution from the employer under the auto enrolment scheme (provided that the employer has passed the “staging date” assigned to it by the Department for Work and Pensions and the worker satisfies the definition of an “eligible job holder”).

Any employer who engages contractors on a similar basis would be urged to seek legal advice.

Contact our Employment Law Solicitors Glasgow

Jackson Boyd have a proven commitment to providing our customers with the best possible services and results, and have been helping people in employment disputes across Scotland for over twenty years. We specialise in dealing with contentious litigation in the areas of property law, road traffic lawpersonal injuryemployment law and dispute resolution. In the last year alone, we have assisted over 12,000 people and secured millions of pounds in compensation. To speak to our team of highly experienced solicitors, get in touch today via our online contact form, or telephone us on 01412496903.

Laura Macdonald

Laura Macdonald

Employment Law Team

“I strive to provide clear and practical advice to clients, focussing on the individual or organisation’s particular circumstances and requirements.”

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