Supreme Court rules against Pimlico Plumbers in landmark employment case

The Supreme Court has rejected an appeal from Pimlico Plumbers over an earlier ruling relating to the employment status of Gary Smith, in a precedent-setting case for the gig economy.

Smith was classed as self-employment for tax purposes but the Supreme Court upheld a decision from the Court of Appeal to class him as a “worker” and afford him the appropriate rights such as sick pay and holiday pay.

Smith was a plumber who worked on a self-employment contract exclusively for Pimlico Plumbers for six years, and after suffering a heart attack requested a reduction in his work schedule from five days a week to three. His request was denied and he was dismissed.

Although Smith paid self-employed tax and was VAT-registered, the Court of Appeal ruled that he was a worker based upon his lack of control over the work, as he was contractually obliged to do a minimum number of hours work a week and did not have the right to transfer his work to a subordinate.

The Supreme Court judgement said: “The dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance.”

Implications for the gig economy

The case will have wide implications for the gig economy and the rights of independent contractors.

Pimlico Plumbers CEO Charlie Mullins warned that other companies using self-employed contractors may face a “tsumani of claims” as a result of this ruling.

He said that this was not a victory for poorly paid workers, but rather an “exploitation” by a “highly-paid, highly-skilled man who used a loophole in current employment law to set himself up for a double pay-day.”

Phil Pepper, employment partner at law firm, Shakespeare Martineau, said: “This case will no doubt have an impact on both the Uber and CitySprint cases which are due to be heard by the Court of Appeal and Employment Appeal Tribunal respectively, later this year. Although the legal arguments in those cases may vary slightly, the fundamental principles arising from the Pimlico Plumbers case will at the very least influence the outcome of those decisions.”

Calls for government to update legislation

Charlie Mullins added that he was “disgusted” by the ruling, as “the five judges had the opportunity to drag our outdated employment law into the 21st Century, but instead they bottled the decision, and as a result thousands of companies across the UK, who use contractors in an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.”

Susannah Kintish, an employment specialist at the law firm Mishcon de Reya, said that the case highlights the need for the government to bring forward legislation to help businesses clarify how to categorise their workforce.

She added: “The supreme court justices have made it clear that this judgment is very specific to the unique facts of the case. It will therefore do little to stem the flow of litigation around worker status, which, in the absence of any overarching principles, will need to be determined on the specific circumstances of each case.”

In response to the Taylor Review, which made recommendations relating to employment practices in the modern economy, the government published a “Good Work” plan launching a range of consultations and promising reform. It is still yet to be seen how these reforms will translate into legislation.

James Murray, Employment Associate at Kingsley Napley LLP, questioned whether the case will make a practical difference for the majority of gig economy workers “given the high cost of enforcing their rights.”

“Employers may tweak their contracts but they will not feel they need to alter the reality of their practices considering the government has said it is not willing to move forward with certain of Matthew Taylor’s more game-changing proposals, for example, reversing the burden of proof in favour of workers. Parliament is also pre-occupied with Brexit for the foreseeable future.”

“A decision for lawyers, but for gig workers ‘Good work’ is still a luxury they can rarely afford.”