Employment Status: Supreme Court dismisses Pimlico Plumbers’ appeal
Yesterday, the Supreme Court handed down its eagerly sought verdict on the employment status of plumber, Gary Smith.
In the unanimous vote, the Supreme Court dismissed Pimlico Plumbers’ appeal and upheld earlier rulings that Mr Smith was in fact a worker and not a self-employed contractor.
In this case, the Supreme Court had to conclude:
- Whether Mr Smith was obliged to personally carry out his work duties; and
- Whether Pimlico Plumbers could be viewed as a client or customer of Mr Smith
The main feature of Mr Smith’s contract was that he had the obligation to carry out the work himself and did not have the right to pass the work on to someone else. However, he did have the right to pass on the work to another Pimlico Plumber, this was a qualified right which was not set out in the written contract.
Mr Smith was able to decline work and take some financial impact, but this did not outweigh the factors that pointed against Pimlico Plumbers being a client. Further, Pimlico Plumbers were in control of Mr Smith’s work uniform, his administrative duties and his wages. This relationship was a fundamental indictor when determining whether Pimlico Plumbers were a client of Mr Smith.
Taking all of the above into consideration, the Supreme Court held that the original tribunal had been right to conclude that Mr Smith was a worker and not self-employed.
What does this mean for employers?
The Supreme Court’s decision does not set any new legal grounds or redefine any of the legal tests that should be used when verifying an individual’s employment status.
However, it is important that employers are aware of what defines the employment relationship as it not only sets out their responsibilities, but individuals rights too. It also affects how they pay tax and national insurance and some entitlements.
A person will be classed as a worker if:
- They have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- Their reward is for money or a benefit in kind, for example the promise of a contract or future work
- They only have a limited right to send someone else to do the work (subcontract)
- They have to turn up for work even if they don’t want to
- Their employer has to have work for them to do as long as the contract or arrangement lasts
- They aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
A person will be classed as an employee if:
- They’re required to work regularly unless they’re on leave, for example holiday, sick leave or maternity leave
- They’re required to do a minimum number of hours and expect to be paid for time worked
- A manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done
- They can’t send someone else to do their work
- The business deducts tax and National Insurance contributions from their wages
- They get paid holiday
- They’re entitled to contractual or statutory sick pay, and maternity or paternity pay
- They can join the business’s pension scheme
- The business’s disciplinary and grievance procedures apply to them
- They work at the business’s premises or at an address specified by the business
- Their contract sets out redundancy procedures
- The business provides the materials, tools and equipment for their work
- They only work for the business or if they do have another job, it’s completely different from their work for the business
- Their contract, statement of terms and conditions or offer letter (which can be described as an ’employment contract’) uses terms like ‘employer’ and ‘employee’
A person will be classed as self-employed if:
- They’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
- They can decide what work they do and when, where or how to do it
- They can hire someone else to do the work
- They’re responsible for fixing any unsatisfactory work in their own time
- Their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
- They use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
- They can work for more than one client
How can Employment Law Services (ELS) help?
If you require employment law advice on any of the issues raised in this article, or any other employment issue give us a call today on 0370 218 5662. You can also find out more about our fixed fee HR packages here and fixed fee employment law packages here, or get in touch.