The courts continue to give basic employment rights to people engaged as independent contractors

The Court of Appeal has today handed down its judgment in the Pimlico Plumbers v Smith case. They found that Mr Smith, a plumber, was a “worker” for the purposes of employment law and so has the right to make a limited number of employment law claims – for example for holiday pay and discrimination. However, he was not found to be an employee and so will not have the benefit of all employment rights. 

You can read the judgment here. 

The case is limited to its facts but, particularly because it is a Court of Appeal decision, is important and will inevitably have consequences for the way in which businesses engage individuals to perform work, especially in the gig economy. The case may also lead to claims for back dated holiday pay being brought by people who were previously thought to be self-employed. 

Pimlico Plumbers had argued that Mr Smith was self-employed, but the Court of Appeal found a number of factors that were inconsistent with that argument. 

One of the key questions in these sorts of cases is whether the individual has an obligation to perform their work personally. The Court of Appeal looked closely at the wording of the contractual arrangements in place between Pimlico Plumbers and Mr Smith, although they also took into account the way in which the contract operated in practice and not just what it said. 

When considering whether Mr Smith was required to perform the work personally, the court focused on the extent to which Mr Smith had a right to substitute someone else to do his work. The court held that in most cases only an unfettered right to provide a substitute would be consistent with self-employed status – if any limitation is placed on the substitution right (except perhaps a limitation that the substitute be qualified to do the work) this would most likely mean that the person could qualify as a worker. 

This part of the judgment is helpful in that it means that if a business does give its workforce an express and unfettered right to substitute (perhaps coupled only with an obligation to show that the substitute is just as qualified to do the work), it will be more difficult for a court to find that the individual has basic employment rights.  

This right to substitute is clearly a key factor in deciding whether an individual is a “worker”. The same issue was also important in the Employment Tribunal’s January decision in Dewhurst v City Sprint.  

When it is released later this year, we expect the Taylor Review into employment practices to focus on the sort of arrangements under scrutiny in cases like Pimlico Plumbers because the gig economy is clearly testing established business models.