Background

Mr Smith worked as a plumber for Pimlico for over five years. There were two contractual documents in place, in which he was described as an independent contractor. One of the agreements made clear that there was no obligation on Pimlico to provide him with work. Mr Smith’s contract was terminated by Pimlico after he suffered a heart attack. He brought various claims against the company including unfair dismissal, disability discrimination, unlawful deductions from wages and failure to pay holiday pay.

The Employment Tribunal dismissed his unfair dismissal claim on the basis that he was not an employee under the Employment Rights Act 1996 (ERA). This claim was not considered by the Supreme Court. However, the Employment Tribunal did find that he was a worker for other purposes, and “in employment” for the purposes of the Equality Act.
Pimlico appealed these findings through various higher courts, up to the Supreme Court.

Supreme Court decision

The Supreme Court upheld the findings that Mr Smith was both a worker and “in employment”. Significantly, the Supreme Court noted that a key requirement of his contract was that Mr Smith was required to provide work personally for Pimlico, and there was only a very limited right of substitution. In addition Mr Smith was clearly integrated into Pimlico’s operations and subordinate to them; for example, he had to wear Pimlico branded uniform, drive a branded van and closely follow Pimlico’s administrative instructions. Further, his contract contained a number of restrictive covenants restricting his activities following termination.

The Supreme Court found that these factors outweighed the aspects of the arrangement that pointed towards him being an independent contractor with Pimlico as a ‘client’, such as the fact he was VAT registered, supplied Pimlico with invoices for his work, and bore some of the financial risk in the event that Pimlico was not paid for the work.
The Supreme Court was further critical of the “carefully choreographed” contractual documents in which Pimlico had attempted to serve the “inconsistent objectives” of presenting its operatives as part of its workforce, whilst at the same time seeking to render them as self-employed in business on their own account.

Accordingly, Mr Smith’s claims could proceed to be heard by an Employment Tribunal.

What to take away

Whilst this case has been reported by some as a landmark decision, in reality it is limited to the very particular facts of this arrangement, and does not significantly change or clarify the law in relation to worker status.

The case does, however, serve as a reminder that courts and tribunals will look at the reality of the situation, over and above what is written in any documentation, and will not look kindly on an employer’s attempt to “choreograph” the documentation in order to deprive a worker of his/her rights. It also illustrates that the question of worker status is by no means limited to the “gig economy”, although it is frequently these cases that hit the headlines.

Employers across all sectors will now look with interest to the Court of Appeal’s hearing of the Uber case in October this year, and will hope that this increasingly complex area of the law will be further clarified.

For further information on how this issue might affect your organisation, please contact Victoria Watson, Bridget Prosser or Ron Simms.