In an employment status case recently considered by the Supreme Court, an employer lost its appeal against a decision that an individual was a worker, not an independent contractor and was therefore entitled to some important statutory rights such as paid annual leave.
Largely as a result of the growth in the “gig economy”, the employment tribunals have been hearing lots of cases recently considering individuals’ employment status and whether they are employees, workers or self-employed independent contractors. This is important to determine as it affects the legal rights a person can claim. For example, only employees can claim unfair dismissal. Unsurprisingly, employers often try to engage staff on the most positive basis for themselves which means they gain maximum flexibility, at the cheapest cost and with minimal legal risk.
The first such case to reach the Supreme Court is Pimlico Plumbers Ltd and Mullins v Smith. The employer lost its appeal against the Court of Appeal’s previous decision that Mr Smith was a worker.
In this case, Mr Smith worked for Pimlico Plumbers for about 5 and a half years. His contract stated that he was an independent contractor. He was obliged to work 40 hours a week and subject to tight controls by the employer including wearing their uniform and driving a van with their logo on it, although he had to provide his own tools and materials. Mr Smith paid tax on a self-employed basis and was registered for VAT. However, the court found that he was in effect required to give personal service and could not send a substitute to do his work. This appears to have been a major deciding factor in the court’s decision that he was a worker.
This decision was not a surprise as the employment tribunal, Employment Appeal Tribunal and Court of Appeal had all found against the employer.
Although these types of cases are highly fact specific (and so are not always a useful guide to how other cases may be determined in the future) this appears to demonstrate a trend whereby the courts are generally very skeptical of arrangements by a company to try and argue that individuals providing their services to it are not employees or workers but, in fact, independent contractors.
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