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Court of Appeal Rejects Pimlico Plumbers' Appeal in Employment Status Case

There have been a number of recent cases looking at the precise nature of the employment status of those working for employers who like their operatives to appear to clients as their representatives but who operate a model of self-employment. In Aslam and Others v Uber BV and Others and Dewhurst v CitySprint UK Limited, often referred to as 'gig economy' cases, taxi drivers and bicycle couriers respectively were found to be workers for the purposes of the National Minimum Wage and working time rights rather than self-employed contractors. Whilst each case is decided on its own merits, such business models will be much harder to maintain after the ruling of the Court of Appeal in a further case on this topic – Pimlico Plumbers Limited and Another v Smith.

Pimlico Plumbers Limited used 125 operatives to supply services to householders on its behalf. Amongst other requirements, they had to work a five-day, 40-hour week and to be on call at all times during their shifts. They also had to wear uniforms, drive vans, carry identity cards that bore the company's logo and conform with personal conduct guidelines. Pimlico Plumbers could monitor the movement of its operatives via GPS fitted in their vans and they were required to liaise with the company regarding any holiday leave or time off work.

On the other hand, the operatives had to pay rent on their vehicles and provide all their own tools, equipment and materials. They had to arrange their own professional indemnity insurance cover and their contracts with the company stated in clear terms that they were in business on their own account and responsible for paying their own Income Tax and National Insurance Contributions.

One of the operatives, Gary Smith, had worked for Pimlico Plumbers for six years before he launched Employment Tribunal (ET) proceedings claiming, amongst other things, that he was unlawfully and unfairly dismissed after he suffered a heart attack. In the circumstances, a preliminary issue arose as to the basis on which he performed work on the company's behalf.

The ET found that Mr Smith was a worker within the meaning of the Employment Rights Act 1996 (ERA). Although he was not an employee in the ordinary sense, his working arrangements met the definition of employment within the ERA, which defines a worker as an individual who has entered into or works under a contract of employment or any other contract whereby they undertake 'to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual'. The ruling meant that the ET had no jurisdiction to entertain his unfair and wrongful dismissal claims. It was, however, able to consider his complaints of direct disability discrimination, failure to make reasonable adjustments, underpayment of holiday pay and unauthorised deductions from wages. The ET's decision was subsequently upheld by the Employment Appeal Tribunal.

In dismissing Pimlico Plumbers' challenge to that result, the Court of Appeal could find no flaw in the ET's conclusion that Mr Smith's relationship with the company was not that between an independent contractor and his customer or client, but rather that of a worker. In reaching its judgment, the Court summarised the principles that apply when deciding whether or not the 'personal performance' requirement has been met (paragraph 84 of the judgment) and focused in particular on the fact that, although there was evidence that plumbers could sometimes swap jobs, Mr Smith had no unfettered right to substitute another operative to carry out his work and was contractually obliged to work for a minimum number of hours each week.

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