Contractor unlawfully labelled ‘self-employed’ – Supreme Court rules

News Article

A landmark case in the Supreme Court has found that a worker was unlawfully labelled as self-employed instead of as a worker for the company.

Gary Smith, a former heating engineer for the company was successful in his claim against Pimlico Plumbers, establishing that he was in fact a worker and not self-employed and was therefore entitled to a number of employment protection rights, such as holiday and sick pay.

Mr Smith had already brought a successful claim against Pimlico in each stage of his legal battle through the courts. The decision by the UK’s highest court is expected to guide future case law in regards to those operating as contractors in the so-called ‘gig economy’.

Delivering the judgment, Lord Wilson said: “Although the contract did provide him with elements of operational and financial independence, Mr Smith’s services to the company’s customers were marketed through the company.

“More importantly, its term enabled the company to exercise tight administrative control over him during his periods of work for it; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.

“We hold that the tribunal was entitled to conclude that the company cannot be regarded as a client or customer of Mr Smith.”

Following the ruling, Pimlico Plumbers’ Chief Executive, Charlie Mullins, warned that other companies using self-employed contractors may face a “tsunami of claims” as a result of this ruling.

Samantha Randall, an Solicitor and employment law expert with Palmers, said: “Whilst the judgment recognised that some elements of Mr Smith’s position in the company were similar to those of a self-employed contractor, such as the ability to refuse work, other elements suggested that he was more like a traditional employee.

“This included the requirement to wear a uniform and have a tracker fitted to his van, while his contract made mention of wages and gross misconduct, elements that would normally be associated with a direct employee rather than a contractor.”

“The case of Pimlico Plumbers is the first of its kind to make it to the Supreme Court and while there have been others, such as Uber’s previous hearings in tribunals regarding a number of its drivers, this will be the first to set a significant precedent that future rulings are likely to consider.

“With the abolition of employment tribunal fees, it has become far easier for disgruntled individuals to bring claims than in the previous five years, so the number of construction sub-contractors who feel they have been unfairly labelled as self-employed, could continue to rise in the months and years to come.”

For help and advice with all aspects of employment law including a review of your terms of contracts for self-employed contractors to ensure compliance, please contact us.