The Pimlico Plumbers decision and the ramifications for the contracting industry

    The decision of Pimlico Plumbers v Smith has been handed down by the Supreme Court which, by unanimous decision, found Mr Smith to be a worker of Pimlico Plumbers. It is important to remember that this is a case which centres around worker status, not employment status, and currently worker status for employment law purposes has no direct bearing on tax status (although this looks likely to change next year).


    The facts

    Mr Smith was engaged as a self-employed plumbing and heating engineer by Pimlico Plumbers and provided his services to them for many years. Following an illness and period of time off Mr Smith sought to return to Pimlico Plumbers but providing his services on reduced hours. Pimlico Plumbers stated that it could not accommodate a reduced hour working basis and terminated Mr Smith’s contract. 

    Mr Smith brought a claim against Pimlico Plumbers for unfair dismissal. His initial claim was for employment status, or if the tribunal could not find employment (which it did not) limb b worker status. It was this limb b worker status which proceeded to the Supreme Court, the claim was for direct disability discrimination (and failure to make reasonable adjustments) and holiday pay. 


    The decision

    The Supreme Court upheld the previous tribunals’ decisions and held that Mr Smith met the definition of a “worker”. 

    In respect of personal service it was found that while the contract didn’t expressly oblige Mr Smith’s personal service there was equally nothing in the contract which expressly denied the existence of personal service (i.e. no right of substitution). While there was some suggestion that Mr Smith could send someone else in his place if he had quoted a job and then found another more profitable job elsewhere, this was regarded by the tribunal as little more than covering a shift and did not negate his personal service. Further, the tribunal found that the wording of the contract used phrasing such as “you” and “your” throughout, and concluded that the style of language used was directed personally to Mr Smith, and as such inferred that Mr Smith’s personal service was a pre-requisite of his engagement. 

    In respect of the “in business” and “client or customer” criteria the original tribunal considered the issue of control when answering this question and this approach was endorsed by the Supreme Court. 

    The contract implemented by Pimlico Plumbers referred to their internal policies which were binding on Mr Smith. The Supreme Court held that the contract made no provision as to any lack of control and that Mr Smith had to follow the administrative controls placed on him by the company’s control room. They also considered that factors such as requiring Mr Smith to use their vehicle (fitted with a tracker), wear the company branded clothing and carry its ID card indicated that Mr Smith was part and parcel of Pimlico Plumbers. On a final note the court scrutinised the wording of the contract and drew attention to phrasing such as “misconduct” and “disciplinary” which indicated controlling measures more akin to an employee.


    Accountax conclusion

    While many commentators are citing this judgement as signalling a sea change for the gig economy, the facts of this case are vastly different to those most commonly publicised concerning employment rights of drivers. Those cases see the tribunals considering the app based modern day working practices, which were not in point with the case.

    This case decided on the status of one individual, and hinged solely on the facts of the working arrangements. This case was hindered by the written terms and condition, or lack thereof. As constantly highlighted by each tribunal, the written contract failed to address the key fundamentals of status, it did not contain a lack of personal service or a lack of control. In lieu of any terms to the contrary the tribunals scrutinised the remainder of the contract and the company’s internal policies and homed in on phraseology which implied the existence of personal service and such terminology one would expect to see when engaging employees. 

    This case highlights the fundamental importance of having a specifically drafted contract, worded correctly and tailored to the company’s working practices. Accountax has always advised companies to take great care with their contracts and internal policies to ensure that if the intention is to establish a self-employed relationship then all information provided to the individual, agreed by the individual and internal guidance in respect of that individual is clearly worded in such a way that it is suitable for self-employed individuals and does not infer any other type of relationship.

    While this case may not “change the world” of contracting it should serve as a wake-up call to every company who engages subcontractors. There has never been a more prudent time to examine your working practices and scrutinise your contracts.

    Accountax is an expert on employment status. If you or your clients would like a status health check to examine their current strengths and weaknesses please contact us on 0345 066 0035 or contact the author of this article, David Harmer, directly at d.harmer@accountaxconsulting.com