The UK Supreme Court has today upheld the Employment Appeal Tribunal and the Court of Appeal’s judgments that a skilled tradesman (plumber), who had been engaged as an independent contractor, was in fact a worker entitled to basic worker rights.
In short, Mr Smith was engaged by Pimlico Plumbers Ltd (‘PP’) under a contract which referred to him as an independent contractor. However, Mr Smith was working solely for PP from 2005 and until his contract was terminated in 2011 because the arrangement was such that Mr Smith was required to work minimum 40-hour per week for PP. Mr Smith was also required to wear a PP uniform and to hire and drive a PP branded van. When Mr Smith suffered a heart attack in early 2011 he asked for his 5-day working week to be reduced to 3 days per week but this was refused by PP. In May 2011 PP terminated its engagement with Mr Smith who then issued a number of claims against PP – including claims that he was entitled to workers’ rights.
When the case was first heard, the Employment Tribunal ruled that Mr Smith was in fact a worker for the purposes of s. 230(3)(b) (a ‘limb (b) worker’) of the Employment Rights Act 1996 (‘ERA’), a worker under the Working Time Regulations 1998 (‘WTR’) and an employee for the purpose of the extended definition under s.83 of Equality Act 2010 (EqA). PP appealed the case, first to the Employment Appeal Tribunal, then to the Court of Appeal and finally to the Supreme Court.
The Supreme Court agreed with the lower courts that Mr Smith was a worker because he satisfied the test in s. 230(3)(b) in that:
- He was required to carry out the work for PP personally and could not send a substitute. Although there was an understanding that PP plumbers could swap assignments, Mr Smith was not entitled to use a substitute who was not already working for PP; and
- PP was not a client or a customer of Mr Smith and he was not in business on his own account. The reality was one of subordination with Mr Smith being an integral part of PP’s operations and subject to the disciplinary and other rules of PP.
Having decided that Mr Smith was a limb (b) worker it followed that he was also a worker for WTR purposes and an employee under the EqA.
Although the media is likely to overstate the impact this ruling will have on the gig economy, the reality is that this case does not make any substantial changes to the current law on employment status. The issues in this case are very fact sensitive and, more importantly, PP did not operate a gig model in respect of Mr Smith’s engagement. However, the media attention which this case has received combined with abolishment of employment tribunal fees may encourage an increase in claims by individuals seeking employee or worker rights.
Accordingly, businesses would be well advised to review the arrangements they currently have in place with independent contractors and consultant to ensure they do not find themselves in the same situation as the employer in this case.
The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.
© Miller Rosenfalck LLP, June 2018