The UK Supreme Court unanimously rejected the appeal brought by Pimlico Plumbers in a landmark case for the so-called gig economy, which engages the services of approximately 1.1 million people. The decision has the potential to impact a significant number of businesses using the services of individuals who they have deemed to be contractors/self-employed.
The Supreme Court ruled that Gary Smith, who worked for Pimlico Plumbers for six years, was in fact a worker and not, as Pimlico Plumbers claimed, self-employed. This was despite Mr Smith benefiting from financial and some day-to-day independence, in that he:
– had the right to substitute someone else to carry out his work;
– paid his own tax and NI; and was
– registered as self-employed.
In reaching this decision the Supreme Court held that Pimlico Plumbers exercised ‘tight administrative control’ over how much, and when they paid Mr Smith and, on occasioned, referred to this payment as his wages. The fact that Mr Smith was required to lease a van (which displayed the company’s logo) and wear a company branded uniform meant that the reality of the employment relationship, was not as Pimlico had claimed.
The status of worker entitles the individual to:
– the national minimum wage;
– the statutory minimum length of rest breaks;
– holiday pay;
– protection from discrimination; and they may also be entitled to:
– Some forms of statutory pay such as, sick pay.
Specific & unique
The decision reached by the Supreme Court is fact specific and unique to this particular case. Therefore, it is unlikely that it will stem the flow of potential litigation.
Jennifer Linford, Solicitor in Lodders’ Employment Team comments:
“Given the significant media interest this case has attracted and the prominence of its reporting, there can be little doubt that individuals currently deemed as contractors/self-employed will be assessing their own employment status and the financial gain they could seek to claim if the relationship veil is lifted, revealing something which may be more advantageous for them.
“Despite the lack of legal guidance by the Supreme Court, there are factors that businesses should objectively assess when they initially engage the services of an individual and these should be continuously reviewed throughout the business relationship.
“A proactive and responsive approach will help minimise the potential risk of employment status litigation and limit the potential negative financial and commercial ramifications.”
Lodders’ team of employment solicitors offers accurate, focused and solution-based legal advice to a wide range of clients. We have forged an excellent reputation for advising SME’s, publicly owned companies, charities and other bodies in respect of all manner of employment related issues.
For more information or advice please contact Nick Rowe, email: firstname.lastname@example.org or Jennifer Linford email: email@example.com, tel: 01242 229093.