Gig Economics: Reality of the Situation is Key, Even in a Post-Fact World

Gig Economics

A plumber who signed an agreement with his company suggesting that he was self-employed,  was in fact entitled to rights as a ‘worker’, according to the Court of Appeal in Pimlico Plumbers Ltd and another v Smith. The judgment has important implications for employers that claim their workers undertake services on a self-employed basis and that they effectively run their own businesses.

Key Points:

- More and more self-employed staff are successfully persuading the Employment Tribunal, that they are in fact ‘workers’. 

- The Employment Tribunal remains sceptical of contractual documentation stating that someone is self-employed. Contracts should reflect the reality of the situation. 

- The Government initiated various inquiries and reviews of the rights of workers and theself-employed (particularly those in the gig economy). This area of law is likely to undergosignificant reform in the next few years.

Case Details:

Gary Smith worked as a plumber for Pimlico Plumbers for 6 years (from 2005 until 2011). The agreement between the company and Mr Smith described him as a “self-employed operative”.  

Mr Smith wanted to reduce his working days at Pimlico Plumbers following a heart attack. 

The wording of the contract suggested that he was in business on his own account, providing a service to Pimlico Plumbers: ‘You are an independent contractor of the Company, in business on your own account. Nothing in this Agreement shall render you an employee…’ 

Mr Smith was required under his contract to wear Pimlico Plumber’s uniform (which displayed the company’s logo) and use a van leased from Pimlico (with a GPS tracker and the company’s logo). The company also exercised very tight control around the way he performed his work, and the pricing structures he worked to. 

However, Mr Smith could choose when he worked and which jobs he took. He was required to provide his own tools and equipment and he handled his own tax and insurance. 

Following the termination of this arrangement, Mr Smith brought claims for unfair dismissal and disability discrimination. 

The employment tribunal found that he could not claim unfair dismissal because he was not an employee.  However, the tribunal decided that he could claim disability discrimination as a “worker”. A worker is an individual that provides their services personally, and is not in business on their own account. The Court of Appeal agreed with the lower courts, that Mr Smith was entitled to basic workers' rights, although he was technically self-employed.  The case will be appealed to the Supreme Court. If this seems disproportionate, bear in mind that Pimlico Plumbers might be motivated by the fact that NICs should have been paid over to HMRC in respect of payments made to ‘workers’. This case might therefore lead to a huge NICs liability stretching back years, and covering all of their self-employed plumbers.