Supreme Court judgement confirms self-employed plumber is a “worker”. This decision could have far-reaching implications for many modern businesses, which include a structure based on a collection of self-employed sub-contractors. The emergence of the gig economy and the many opportunities for flexible and casual working arrangements has further muddied the waters on employment status. An individual’s employment status is very important as it determines what rights they have.
- If genuinely self-employed, an individual will have very few rights as they are operating a business of their own.
- However, as ‘worker’ is entitled to paid annual leave, the national minimum wage and rest breaks and the right to seek protection against unlawful discrimination.
- As an employee, an individual will have the full range of protection, including the right not to be unfairly dismissed.
In the case of Pimlico Plumbers, Mr Smith worked as a plumbing and heating engineer solely for the firm for almost 7 years. His contract stated he was a ‘self-employed operative’. He raised invoices, was VAT registered and personally accounted for tax and national insurance. The company manual stated that Mr Smith should work 40 hours a week although there was no obligation for the company to provide him with those hours if there was no work available. He drove a company van and wore branded uniform. The arrangement worked well for both parties until Mr Smith fell ill and was unable to work at which point he took his case to court challenging his employment status, claiming unlawful deduction from wages, holiday pay and disability discrimination.
There are several tests an employment tribunal will apply and what is clear is that very little attention will be given to what the parties may label themselves. The tribunal looked behind the wording of the contract and were particularly swayed by the fact that Mr Smith was obliged to perform his services personally and by the high degree of control the company exercised over him. It was concluded that he was in fact a worker – a decision now upheld by the Supreme Court.
Employers should now be even more careful when engaging self-employed contractors and immediately review any existing contractual relationships. If you are in any doubt about the status of your workforce, call Henry Doswell on 01233 722942 or email him at email@example.com for a free, no obligation chat.