Pimlico Plumbers Lose Court Battle Over Its Workers' Employment Status
The Law Of… getting fair employment rights
Pimlico Plumbers recently lost a court battle over the employment status of its staff, after one of its former plumbers won the right to be recognised as a worker.
Joy Drummond, Partner in Employment Law, takes a closer look at the case and what this ruling means for other workers in the gig economy.
Challenging His Employment Status
Gary Smith, a former Pimlico Plumber who had worked for the company for 6 years until 2011, had previously won an employment tribunal case where he challenged the firm's belief that he was self-employed, and not a worker.
Unhappy with the decision, Pimlico Plumbers launched an appeal arguing that Gary was an 'independent contractor' for the company. But, this was recently rejected by the Court of Appeal.
Employee, Worker, And Self-Employed – What's The Difference?
There are generally 3 types of employment status: employee, worker, and self-employed.
The employment rights that a person has will depend on which category they fall under:
- Employee: to be an employee, a person must work under a contract of employment, which means working under a ‘contract of service’ rather than under a ‘contract for services.’
For there to be a ‘contract of service’, the person must carry out the work personally and the employer is obliged to provide work and the employee is obliged to do that work.
Employees are entitled to the full range of employment rights, unlike workers or self-employed individuals.
Some of these rights include:
- A written statement of employment
- An itemised pay slip
- The National Minimum Wage (NMW)
- Holiday pay
- Maternity or paternity pay
- The right to request flexible working
- Protection against discrimination
- The right to claim unfair dismissal (if they have 2 years’ service)
- Worker: workers, like employees, have to work under either under a contract of employment or any other contract to do the work But, there doesn’t have to be an obligation on the employer to provide work or on the worker to accept work.
The person they work for must not be a client or a customer of the business that's carried out by the person doing the work.
In contrast to employees, workers are only entitled to some employment rights, for example:
- The National Minimum Wage
- Holiday pay
- Protection from discrimination
- The right to not be treated less favourably if they work part-time
- Self-employed: where the work is being done for someone as a customer or client and the person agreeing to do the work doesn’t have to do it personally, they will be self-employed, not a worker (or an employee).
Self-employed individuals don't have access to the same employment rights as employees or workers, and only have limited legal protection such as:
- Health and safety protection when they are on a client's premises
- Protection against discrimination, in some cases
To decide whether a person qualifies as a worker, a vital question to ask is whether they have to do the work themselves.
In this case, the Court of Appeal confirmed that if there is a completely free right to substitute someone else to do the work it is not a contract to do work personally. However, the Court also said that there are circumstances when there can be 'personal service' even where there is a limited right, with conditions, to substitute another person to do the work.
The Court gave the following examples of where there was a right to send a substitute to do the work that could, depending on the particular case, still be classified as ‘personal service’ and not disqualify the person from worker status, and where it could not.
There could still be 'personal service' where:
- There is only a right of substitution when the contractor is unable to carry out the work themselves
- There is only a right to substitute someone else with the consent of another person who has complete discretion to refuse to accept a substitute
There would not be 'personal service' where:
- The right of substitution is only limited by the need to show that the substitute is as qualified as the contractor to do the work
Applying this to the plumber working for Pimlico Plumbers, the Court found that the wording of his contract required personal performance from him even though some plumbers working for the company sometimes substituted other plumbers working for Pimlico Plumbers to do their work.
The contract repeatedly referred to "you" doing the work and did not say a substitute could be sent instead.
Exploiting Workers Through The Gig Economy
Commenting on the outcome of the case involving Pimlico Plumbers, the Department for Business, Energy and Industrial Strategy (BEIS) said:
"We are determined to make sure our employment rules keep up to date to reflect new ways of working, and that's why the government asked Matthew Taylor to conduct an independent review into modern working practices."
The Government’s Employment Status Review published on 9th February (although dated December 2015) accepts that the lack of clarity and transparency in this area "…can lead to a feeling of insecurity and vulnerability and can see some unscrupulous employers take advantage, even exploiting low skilled, low paid workforces."
"Despite this conclusion the Review makes no recommendations", Joy comments. "It is to be hoped that the Taylor Review (expected later this year) is more proactive."
Fighting For Employment Rights
This case is the latest in a series of ongoing legal challenges between gig economy workers and major employers such as Uber, Deliveroo, CitySprint, and Hermes over employment rights:
The ruling in this case could have a much bigger impact on the ongoing issues over employment status, including more clarity over the status of self-employed individuals working in the gig economy.
"This is a good result and helpful not only to the other plumbers working for Pimlico Plumbers, but also to all those workers whose employers are trying to avoid their legal responsibilities by treating them as self-employed."
"Due to the blurred lines between 'self-employed' and 'worker' in the gig economy, it's been far too easy for employers to take advantage of their staff and believe that they won't be challenged."
"But, as we saw in the cases of Uber, Deliveroo, and CitySprint, gig economy workers are refusing to accept this as the status quo and are rightly fighting for their employment rights."
"Joining a trade union is one of the best ways of securing these rights for people who are often low-paid and exploited, and workers unsure of their rights should seek legal advice rather than accept their employer’s view of their status."