The End of the GIG Economy?

Pimlico Plumbers Ltd v Mr G Smith in the supreme court last month held that a plumber who worked under a contract describing him as self employed was, in fact, a worker and is now entitled to various employment law rights.

The Case

Mr Smith worked as a plumber for Pimlico Plumbers for six years until 2011. He successfully argued before the employment tribunal, the employment appeal tribunal and the court of appeal that he was a worker for the purposes of employment legislation.

Pimlico maintained that he was a self employed operative which is how his employment status was described in the agreement between the parties. Mr Smith filed tax returns, he was VAT registered, he was entitled to reject work and able to take other jobs and have other employment outside of Pimlico. Significant factors found by the Supreme Court and taken into account when making their decision included;

Mr Smith was required to wear a Pimlico branded uniform and to use a Pimlico leased branded van.
Mr Smith had to carry an ID card and follow administrative instructions of its control room.
Mr Smith’s contract refers to ‘wages’, ‘gross misconduct’ and ‘dismissal’ and included a number of restrictive covenants for work post termination.
Mr Smith was able to swap assignments with other plumbers already working for Pimlico (more aligned to shift-swapping than providing a substitute) provided the employer agreed to the substitution.

The decision of the supreme court means that Mr Smith will now be able to pursue his claims of disability discrimination, unlawful deduction of wages and holiday pay against Pimlico.

However, in the meantime, other cases on employment status are to follow this case through the court system.

Significance of Pimlico

Whilst the Chief Executive of Pimlico, Charlie Mullins, is reported to have stated he is “disgusted by the approach taken to the case by the highest court in the UK” and the decision has been widely presented as ‘new law’, this is not the case.

No established principles have actually altered or changed in the determination or through the escalation of this case through to the highest courts.

The Pimlico case has, however, raised cross-industry and policy focus questions on status relevant specifically in the gig economy.

Whilst each new case will depend on its own facts and circumstances, it is clear that where an organisation has significant control over how an individual employee works, including a limited right of substitution, then individuals will be workers and will be able to benefit from certain employment rights and legal protections.

As Mr Mullins himself states “This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get a nasty surprise from a former contractor demanding more money. It can only lead to a tsunami of claims.”

However even with such a high profile decision being made this doesn’t mean that the decision is here to stay. With the government currently consulting on these issues (see Taylor Review comments below) it is quite possible that Parliament may overrule this decision over the next few years.

What is important is that network partners are vigilant to check contracts, benefits and take legal advice for any consultants, trainers, those in finance or those working on a ‘self-employed’ or freelance basis.