Employment status: the Supreme Court has the final say

In the long running case of Pimlico Plumbers v Smith, the Supreme Court has found that Mr Smith, who worked under a contract that described him as an independent contractor, was in fact a “worker”.  This will prove costly for Pimlico as he will now be able to pursue his claims for backdated holiday pay, unlawful deductions and disability discrimination.  In addition to Mr Smith it also opens the door for others within the organisation to bring claims for unpaid holiday and any other worker rights that have been infringed.

The case demonstrates that courts will not look sympathetically on companies that seek to impose significant control over individuals, whilst trying at the same time to ensure they have limited rights.  Here, the plumbers were required to wear uniforms, drive company vans and suffered strict financial penalties if invoices were not paid by customers.  Despite this Pimlico wanted to limit their own obligations towards these individuals.

An area that many gig economy operations may want to explore more closely is that of “personal service” – an essential element in a finding of worker status.  The Supreme Court made clear that an unfettered right on the part of the contractor to send a substitute (where the company just wants the work done and doesn’t care who delivers the service) may take the relationship over the line into independent contractor.  A restricted right to substitute will not.

So far, in the vast majority of the gig economy status cases, the courts have been coming down on the side of the individuals, opening the door for many to benefit from worker rights.  They are adapting to deal with the changing economy within the current legislative framework arguably making the need for reform (which is  being consulted on by the government) less urgent.

For more information, please contact Emma Bartlett.