The Court of Appeal in the case of Pimlico Plumbers Ltd v Smith [2017] EWCA Civ 51, has found that a plumber, carrying out plumbing and maintenance work on behalf of a plumbing company, was a ‘worker’ within the meaning of the Employment Rights Act 1996 s.230(3)(b), not a self-employed contractor. This was despite the fact that there were two contracts (the 2005 agreement and the 2009 agreement) of employment and a working practice manual that operated so that both Mr Smith and Pimlico Plumbers believed Mr Smith was a self-employed contractor.
Mr Smith had suffered a heart attack in 2011, after which he requested to reduce his days from five to three days a week. This request was denied and Mr Smith was subsequently dismissed. Mr Smith then issued proceedings in which he complained of unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay and arrears of pay, direct disability discrimination, discrimination arising from disability and failure to make reasonable adjustments.
The case was initially heard before the Employment Tribunal which had to determine whether Mr Smith was an employee of Pimlico Plumbers, whether he was a worker or whether he was alternatively, genuinely self-employed.
Usefully, the court outlined the distinction between these categories as follows:
- Employee: Persons Employed under a contract of service
- Self-Employed: Persons who are self-employed, carrying on a profession or a business undertaking on their own account, and who enter into contracts with clients or customers to provide work or services for them.
- Worker: Persons who are self-employed and provide their services as part of a profession or business undertaking carried on by someone else. (as per s. 230 of the Employment Rights Act 1996)
The Employment Tribunal found that Mr Smith fell within category c) and was therefore a ‘worker’ and that his working situation met the definition of ‘employment’ in the Equality Act 2010. The reasons for this were as follows:
- The agreement, and its main purpose, was for Mr Smith personally to provide work for Pimlico Plumbers;
- The working manual practice obliged Mr Smith to work a normal week of 40 hours on the days agreed with Pimlico Plumbers;
- Although there was some flexibility, Pimlico Plumbers expected engineers to discuss their working hours with, and to agree them with Pimlico Plumbers. Mr Smith had sufficient obligation to provide his work personally to be a worker;
- There was not an unfettered right to substitute at will. There was no such right given to MR Smith by the contractual documents and no evidential basis for such a practice. Even though in practice engineers with Pimlico Plumbers swapped jobs around between each other, and also used each other to provide additional help where more than one person was required for a job or to do a job more quickly, and there was evidence that external contractors were sometimes required to assist a job due to the need for further assistance or to conduct specialist work, the fact was that Mr Smith was under an obligation to provide work personally for a minimum number of hours per week or on the days agreed with Pimlico Plumbers;
- Although Mr Smith had autonomy in relation to the estimates and work done, Pimlico Plumbers exercised very tight control in most other respects. That included a high degree of restriction on Mr Smith’s ability to work in a competitive situation, which suggested that he was not in business on his own account and was certainly inconsistent with Pimlico Plumbers being a customer or client if any such business;
- Pimlico Plumbers could not be considered to be a client or customer of Mr Smith’s business but is better regarded as a principal. Mr Smith was an integral part of Pimlico Plumbers operations and subordinate to Pimlico Plumbers. He was not in business on his own account.
As Mr Smith was not considered to be an ‘employee’ for the purposes of the Employment Rights Act 1996, the Tribunal did not have jurisdiction to consider Mr Smith’s claims for unfair dismissal, wrongful dismissal, entitlement to pay during the period of a medical suspension and failure to provide particulars of employment. However, as he was considered to be a ‘worker’ for the purposes of the 1996 Act and this fell within the definition of ‘employment’ in the Equality Act 2010, it did have jurisdiction to consider his complaints of direct disability discrimination, discrimination by reason of failure to make reasonable adjustments, and in respect of holiday pay, as well as in respect of unauthorised deductions from wages.
Pimlico Plumbers appealed this decision but it was upheld by the Employment Appeal Tribunal who also found that Mr Smith was not an employee but was a ‘worker’ i.e. a person who is self-employed but provides their services as part of a business undertaking carried on by someone else.
The Court of Appeal agreed with the decisions of the lower tribunals and dismissed the appeal, focusing on the fact that Mr Smith was obliged to perform the contracts personally; to work 40 hours per week; to hire a van with a Pimlico Plumbers’ logo and to use a mobile phone (deducted from his salary).
In edition 146 and 147 of BC Disease News, we highlighted the importance of distinguishing between, workers, employees and self-employed persons for the purposes of EL/Disease claims. We noted that agency and temporary workers, independent contractors and self-employed persons are becoming an increasingly important part of the UK labour workforce due to increasing employer desire for workforce flexibility and an increasing migrant population.
This most recent decision adds to the extensive case law, discussed in those previous editions, and makes it clear that the courts will not simply rely on contractual agreements between parties but instead will look closely at the working relationship in order to determine an individual’s employment status. Where a contractor works exclusively for one company, it seems that the line between independent contractor and employee can become blurred.
The full judgment can be accessed here.
