The Supreme Court has unanimously held that a ‘self-employed’ plumber was a ‘worker’ and as such he was entitled to certain employment rights, including holiday, sick pay and protection from discrimination. Whilst perhaps unsurprising, this high profile case has already sent shockwaves across businesses who operate within the gig economy and those that frequently engage ‘self-employed operatives’ or ‘sub-contractors’.
This important judgment provides clear evidence that regardless of the contractual ‘label’ applied to an individual, the courts shall not hesitate to put aside and even look behind the written documentation in order to establish the true reality of the working arrangements between employer and employee.
If you are a business that engage ‘self employed contractors’, ‘consultants’, ‘freelancers’ or ‘independent contractors’ then it is vital that you review your contractual arrangements to ensure that the documentation reflects what is happening in reality.
About the case
In summary, Mr Smith who despite having been engaged on a ‘self-employed contractor’ contract for 6 years, and having filed tax returns to this effect, brought numerous claims in the employment tribunal, including unfair dismissal, disability discrimination and holiday pay, following termination.
On looking at the facts it was found that Mr Smith performed work personally for Pimlico Plumbers and that they were neither a client of Mr Smith nor were they a customer. He did not have an unfettered right to pick and choose what work he performed for them. He had to wear a work uniform, work 40 hours per week, drive a company van and was subject to their disciplinary procedures. He was also subject to certain restrictive covenants upon termination. This level of subordination and control was key to finding that Pimlico Plumbers were not customers of Mr Smith and significantly undermined the argument that he was ‘self-employed’.
However, the Court did not change or make law and did not provide clarity around “worker” status. This means that cases will continue to be based on specific facts and the position shall remain uncertain for businesses who engage people on self-employed contracts.
Simply labelling workers as ‘self-employed’ does not guarantee the corresponding legal status. The nature of the relationship and the degree of bargaining power and mutual obligation between the parties is crucial in deciding upon ‘worker’ status.
If you have any doubts about your employees contracts and require assistance in reviewing your working arrangements and documentation, or have any queries in respect of employment status, please email Victoria Regan at email@example.com