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The Pimlico Plumbers appeal – another warning for the “gig economy”?

Last month, I blogged about a bike courier who successfully persuaded an employment tribunal that she was a worker (and so was entitled to paid holidays from the courier company). Following hot on the heels of that decision, the Court of Appeal has upheld a plumber’s claim that he was a worker of the company Pimlico Plumbers.

To recap: employees, workers and self-employed – why does it matter?

The key reason for disputes about employment and worker status is that UK employment law provides different levels of protection for employees, workers and self-employed contractors.

  • Workers don’t benefit from the full range of rights available to employees (in particular, the right not to be unfairly dismissed).
  • Workers have more employment rights than self-employed contractors – including the right to receive the minimum wage and paid holidays.

This means that for an individual (and depending on the circumstances) there can be a real value in establishing that they are an employee or worker.

Deciding the plumber’s status

The plumber’s relationship with Pimlico began in May 2005, and continued until April 2011 (when Pimlico terminated it).

Following the termination of the relationship, the plumber raised unfair dismissal and disability discrimination complaints against Pimlico in the employment tribunal.  This brought up issues about the plumber’s status: to be entitled to protection against unfair dismissal, he needed to be an employee; to be entitled to protection against disability discrimination (in those circumstances), he needed to be either an employee or a worker.

In the case, there were a number of factors that suggested that the plumber was neither an employee nor a worker (and was in fact a self-employed contractor):

  • His written agreement with Pimlico described him as a “self-employed operative”.
  • There was no guarantee that Pimlico would provide him with a particular amount of work.
  • He could choose which jobs he picked up, and the times at which he worked.
  • He provided his own tools and equipment.
  • He dealt with his own tax and national insurance (and was not subject to PAYE).

On the other hand, there were also factors that suggested a closer relationship between the plumber and Pimlico:

  • He was required to wear Pimlico’s uniform, which had its logo on it.
  • He had to use a van leased from Pimlico.
  • His agreed with Pimlico obliged him to work a minimum number of weekly hours.

After considering the relationship in the round, the employment tribunal held that the plumber was not an employee (and so could not claim unfair dismissal) but was a worker (meaning that he could claim disability discrimination). This judgment was upheld by the employment appeal tribunal.

The Court of Appeal has now also upheld the employment tribunal’s decision, stating that it was right to take the view that the plumber “was an integral part of [Pimlico’s] operations and subordinate to [Pimlico]”.

Another warning?

Although some might question whether this is a true example of the “gig economy” – a phrase which tends to conjure up images of individuals carrying out short-term, unskilled jobs – it is further proof that the employment and worker status is very much a hot topic at the moment. Wrongly classifying an individual as self-employed could lead not only to employment tribunal claims, but also potential liability for tax and national insurance with added interest and penalties.

It now seems clear that employment status will be a key issue for 2017. The employment tribunal’s decision on Uber drivers is going to the employment appeal tribunal, and more tribunal are sure to follow. The government is also taking stock via its review of Employment Practices in the Modern Economy and inquiry in the Future World of Work and Rights of Workers.  As the Court of Appeal said “the question of when a relationship is genuinely casual [is] a very live one at present”.

It is possible to devise a business model whereby individuals are genuinely self-employed contractors, but this cannot be achieved through documentation alone: it must be reflected in the practical reality. Brodies’ Employment and Tax teams can work with you to identify any risks and strategies for the future.

Workbox

Users of Workbox, the Employment team’s online HR portal, can access detailed information on the different rights of employees, workers and the self-employed, along with guidance on categorising staff. Have a look at the page on employment status.

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