As I mentioned in last month’s newsletter, an important judgment concerning the status of workers was handed down by the Court of Appeal on 10 February, namely Pimlico Plumbers Limited and Mullins -v- Smith. The decision was regarded as significant enough to make it on to the national news bulletins and Newsnight, as well as widespread coverage in the press.
Mr Smith is a plumber who worked exclusively for Pimlico Plumbers between August 2005 and April 2011. He claims that, following a heart attack in January 2011, he was wrongfully dismissed in May 2011. According to his initial agreement with Pimlico Plumbing he was a “sub contracted employee”. The contract also stipulated that he had to wear a Pimlico Plumbers uniform, work for five days a week (a minimum of 40 hours), give notice of annual leave and be available to take on-call work. There was a ban on undertaking what was described as “private work”, breach of which would lead to instant dismissal. The contract also provided for payment of “wages”.
The initial contract was replaced with a longer and more detailed contract in 2009, which was entitled “Agreement – Self-Employed Operative”. Mr Smith was required to provide his own tools and equipment and he had to pay his own expenses. He also had to maintain adequate public liability insurance. Sub-paragraph 6.1 of the contract stated:
You are an independent contractor of the Company, in business on your own account. Nothing in this Agreement shall render you an employee, agent or partner of the Company and the termination of this Agreement (for whatever reason) shall not constitute a dismissal for any purpose.
Following the termination of the 2009 contract, Mr Smith lodged an employment tribunal claim, complaining of unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay and arrears of pay. He also claimed direct disability discrimination, discrimination arising from disability and a failure to make reasonable adjustments on account of his disability. At a pre-hearing review Judge Corrigan determined that Mr Smith was not an employee. There were circumstances set out in the contract in which Pimlico Plumbers did not have to pay Mr Smith such as when an invoice was unpaid after six months; he had to rectify problems at his own cost; the understanding of the parties that he was self-employed, both for employment and tax purposes, and that he was VAT registered.
However, Judge Corrigan went on to find that he was a ‘worker’ within the meaning set out in section 230 of the Employment Rights Act 1996:
In this Act “worker”…means an individual who has entered into or works under (or, where the employment has ceased, worked under)—
(a) a contract of employment, or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;
and any reference to a worker’s contract shall be construed accordingly.
Her reasoning was that the contract, in its main purpose, provided for Mr Smith to provide work personally. There was a normal working week of 40 hours and a minimum obligation to work 36 hours. Hours worked generally had to be agreed. There was no unfettered right to send a substitute to do the work. Pimlico Plumbers exercised very tight control over the work done and it was better regarded as a principal of rather than a client or customer of Mr Smith.
Appeal and cross-appeal were both dismissed in the Employment Appeal Tribunal.
In the Court of Appeal, Pimlico Plumbers contended that the tribunal took the wrong approach to the question of personal service, that there was a failure to consider whether Mr Smith was a worker under one contract or a series of successive contracts, that the finding about minimum hours required to be worked was inadequately reasoned and that there was an inadequate balancing exercise by failing to take into account relevant considerations and taking into account irrelevant considerations. Each was considered and rejected with the result that the appeal was dismissed.
This is lengthy judgment (147 paragraphs) and includes very detailed analysis of all the key issues when considering whether someone should be classed as a worker, with appurtenant rights such as holiday pay. Since it is a judgment of the Court of Appeal it is likely to be regarded as an authoritative statement of the law as it stands in connection with this topic of the moment.