Pimlico PlumbersLate last month the Supreme Court delivered its long-awaited if not altogether surprising decision in Pimlico Plumbers v Smith. It upheld the decisions of the lower courts that Mr Smith should properly be classified as a worker, with attendant rights (including discrimination rights and holiday pay), rather than being self-employed.

Gary Smith worked for Pimlico Plumbers for six years (from 2005-2011). Although he was VAT registered and paid self-employed tax, from an employment law perspective, he was nonetheless entitled to workers’ rights.

The judgment was unanimous and the lead judgment was provided by Lord Wilson. Having considered the history of the law concerning the status of workers (dating back to 1875), he considered the written agreements between Pimlico and Mr Smith (the original dated 2005 and a replacement issued in 2009), both of which he thought were confusing. However, he noted the extent of control exercised over Mr Smith including the right to dismiss him for gross misconduct, how he should provide his services, an obligation to provide advance notification of absences and the supply of tools. The second agreement included an obligation to wear Pimlico’s uniform, a minimum 40 hours’ working week, advance notice of annual leave and provision for warnings and dismissal.

He also noted that there was no provision for Mr Smith to appoint a substitute to do his work (other than by another Pimlico operative). Having considered relevant authorities, he concluded that “the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance”.

There was an “umbrella contract” between Mr Smith and Pimlico whereby, if work was available to be done by him, he would be expected to do it. Nonetheless, Mr Smith correctly presented himself as self-employed for tax purposes.

In summary,

…there were features of the contract which strongly militated against its recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. the severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor.

Pimlico’s appeal was accordingly dismissed.

Meanwhile, the Independent Workers Union of Great Britain has won the first stage of a High Court challenge in which it seeks to overturn a ruling last November by the Central Arbitration Committee that, because riders were able to pas on jobs to a substitute or to abandon a job, they were not obliged to provide a personal service and could not therefore be classified as workers. Deliveroo is also facing a parliamentary inquiry into the pay and conditions of its couriers. Chairman of the work and pensions committee, Frank Field, said:

The weight of the evidence I’ve seen shows that bogus self-employment is being peddled by those who benefit so handsomely from the gig economy, to avoid the obligations they have to their workforce. I now wish to see if this is a partial view or whether it, sadly, represents what is going on in yet another company operating in the gig economy.

The scope of the committee’s inquiry will also include Hermes, Uber, DPD and Parcelforce. In the case of Hermes, an employment tribunal in Leeds has found that 65 couriers were entitled to be treated as workers rather than as independent contractors. Although not binding on other courts and tribunals, some 14,500 Hermes couriers are engaged under the same contracts.

As I have observed previously, there is no doubt that courts and tribunals are readily finding that gig economy contractors are, in many cases, properly classified as workers with the attendant rights. Therefore, in order to avoid potentially very expensive back pay claims, it is vital for those operating in this sector to review their contracts.