22 June 2018
In the last instalment of the Pimlico Plumbers employment rights’ saga, the Supreme Court has agreed with the Court of Appeal’s decision that a self-employed plumber engaged by Pimlico Plumbers was actually a worker and therefore entitled to employment rights such as national minimum wage, sick pay and holiday pay.
Whilst the contractual documentation was set up so that the plumber was deemed to be self-employed and not a worker or employee, the reality of the situation was different. The key factor in deciding the plumber was a worker was that he was personally required to do the work; that is, he was not free to sub-contract it to another person of his choosing – a key factor in establishing genuine self-employed status.
Interestingly, Deliveroo not so long ago adapted its contracts to address this point. Previously, Deliveroo’s couriers could not subcontract their work to any person but they changed this so that couriers could sub-contract the work to a person of their own choosing. The crucial requirement for personal service no longer applied thus not making them workers.
What impact will this decision have?
Well, probably very little as the facts of the case are fairly specific. For example, the plumber was contractually required to work 40 hours per week and he could sub-contract the work to someone else, but only if that person was already engaged by Pimlico Plumbers. There were also various other conditions such as the uniform he had to wear, where he had to source his parts from and the prices that could be charged to customers.
However, it is a reminder for organisations that adopt workforce models which use self-employed contractors that they should check their terms of engagement and, more importantly, what happens in reality, to ensure there is no requirement for personal service. However, this will need to be balanced against whether the organisation’s ability to control who carries out the work is a critical to service delivery.
An additional risk is that if the individual is deemed to be a worker, rather than self-employed for employment rights purposes, this may influence HMRC’s views as to whether they are not actually self-employed for NIC purposes, creating a substantial liability for the organisation.
Latest in a long line of cases
The Pimlico Plumbers case is one of a long line of cases currently being scrutinised by the courts and tribunals concerning worker status in the gig economy. Amazon has also now joined the list of high profile tech companies whose couriers’ employment status is now being challenged.
We’re also waiting for the government’s response to the consultations it announced following the Taylor Review, all of which recently closed. One of Taylor’s key recommendations was to redefine the test for employment status to bring it up to speed with the modern world of work. The continual judicial challenges being brought against companies which have developed innovative ways to categorise their workforce suggests that clarification of the legal principles concerning employment status could be well overdue.
If you have any concerns about how these potential issues might impact your business or would like to conduct a status assessment of your workforce, please contact Charlie Barnes or your usual RSM contact.