A plumber was right to say that he deserved basic worker rights like sick pay, despite being taken on as a self-employed contractor, the Supreme Court has decided.
Gary Smith, who joined Pimlico Plumbers in 2005, brought the case after he was told he could not claim unfair dismissal following a heart attack because he was not an employee on an employment contract.
But that verdict from an employment tribunal has now been overturned, after judges found he could not substitute; was required to work personally and could not regard Pimlico as a client.
These are all pointers away from self-employment and, in the case, while they were not sufficient to make ‘self-employed’ Smith an employee, they do qualify him to be a ‘worker’ entitled to basic rights, like holiday and sick pay.
“Companies using self-employed contractors now face a ‘tsunami of claims,’” warned Pimlico boss Charlie Mullins, calling the Supreme Court judges’ findings ‘disgusting.’
Mullins pointed out that Smith was paid more than £500,000 over three years by Pimlico, so he rejects claims that the verdict is a ‘victory for the poorly paid battling big corporations.’
But Smith’s two contracts (the second started in 2009) were drafted in “highly confusing terms,” the judgement says, and they required him to work at least 40hours a week.
Check your contracts
Covering his total of six years at Pimlico, they also required him to ask for permission to take time off and, while he worked, mandated he drive a branded van and wear Pimlico’s uniform.
“Firms that engage self-employed people…. must now check their contractual arrangements and working practices,” advised the Freelancer and Contractor Services Association.
The FCSA also said that despite signing a self-employed contract and being VAT -registered, Smith was “clearly a worker…not self-employed, despite the intention Pimlico”.
However, the Kent-based plumber was free to reject a particular offer of work from Pimlico, and was free to accept outside work if no work was offered by Pimlico clients.
He also bore some of the Financial Risk of the work – an IR35 status factor, and in terms of the key factor Control, the manner in which he did the work was not supervised by Pimlico.
In many respects, the case ultimately reflects the need for simplification of complex employment law,
The lines between employment and self-employment remain blurred and can easily be misinterpreted. But not all contractors are calling for employment rights.
The sheer prospect that they could do – perhaps inspired by the Smith case — is bad enough according to Mullins.
“This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get nasty surprise from a former contractor demanding more money, despite having been paid in full years ago,” he said.
‘Not fit for purpose’
But the real “shame” of the case, in his view, is that while it is “generally accepted” that employment law is “not fit for purpose”, the Supreme Court gave no nod to this consensus.
“The five judges had the opportunity to drag our outdated employment law into the 21st Century, but instead they bottled the decision,” Mullins said.
“As a result, thousands of companies across the UK, who use contractors in an honest and responsible way, remain exposed to huge potential claims in the future.”
The government is once again consulting on employment status, however, caution is advised.
Care must be taken to ensure that there are no unintended consequences from any decisions made which might penalise those people who are genuinely self-employed.
“Self-employed workers do not need an extra layer of red tape or any more legislation imposed on them that will serve to hamper them. They are driving the UK economy right now, so let’s support them not punish them” advised Julia Kermode chief executive of the FCSA.