13 Jun 2018

Today’s Supreme Court verdict in favour of plumber Gary Smith v Pimlico Plumbers is yet another step taken by the courts to protect workers in the gig economy.

Opening the floodgates for gig economy workers? We shouldn’t rush to conclusions.

Today’s Supreme Court verdict in favour of plumber Gary Smith v Pimlico Plumbers is yet another step taken by the courts to protect workers in the gig economy. However, it’s a decision that will not apply to every situation, and there is still scope to structure engagements in a manner which is fair, whilst maintaining business flexibility.

In recent years there’s been much media coverage of conflicts between gig workers, and the businesses that take them on, such as Uber, Deliveroo and City Sprint. Workers have claimed they lack protection and rights; businesses say the workers benefit from considerable flexibility in working hours.

The latest decision

Lord Wilson (backed unanimously by the rest of the Supreme Court in Pimlico Plumbers v Smith) has added to the difficulties businesses face when hiring staff on flexible terms. In his decision – which was highly critical of both Pimlico Plumbers’ “confusing” arrangements and of the previous Employment Tribunal decision – he found Gary Smith was a “worker” and therefore entitled to certain minimum rights such as pension contributions and paid annual leave.

The background

Mr Smith paid tax on a self-employed basis, though he worked solely for Pimlico Plumbers, wore their uniform, rented one of their branded vans and was contracted to work a minimum number of hours each week. Following a heart attack, he wanted to reduce to three days a week instead of five, but Pimlico did not agree to this and took back his van. Mr Smith brought claims including for paid annual leave (a right only available to workers and employees). When an employment tribunal ruled that Mr Smith was a worker, Pimlico appealed, but the Employment Appeal Tribunal, Court of Appeal and now the Supreme Court have all backed the original finding.

Defining a worker

The Supreme Court decided Mr Smith’s right to provide a different plumber to substitute for him (e.g. if he was double-booked) did not negate his “worker” status, as he could only pass work to another Pimlico Plumbers staff member and not a non-branded plumber. The Court also found the “severe terms as to when and how much [Pimlico] was obliged to pay him… betrayed a grip on his economy inconsistent with his being a truly independent contractor”. The fact that his contract made reference to “wages”, “gross misconduct” and “dismissal” also pointed towards Mr Smith being a worker embedded within Pimlico.

The Supreme Court did not approve or reject the Court of Appeal’s more detailed analysis on the issue of substitution, which is still useful guidance for organisations looking to structure their workforce in an efficient but fair way.

Personal service is a key factor in deciding whether an individual should be treated as a worker. If an individual has a genuine opportunity to send someone else to do the work, that indicates a more arms-length commercial relationship. It should not necessarily mean the individual contracting party is entitled to “worker” rights such as paid annual leave.

Developments in case law over the last few years have blurred the boundaries between “employee” and “worker”, causing a good deal of confusion. Today’s decision might not be a business-friendly result but it does at least help clarify some issues.

The verdict makes it clear that some restrictions on sending someone else to do work can still be consistent with personal service. For instance, where the right to substitute only applies when the contractor cannot carry out the work personally; and with the consent of another person who has absolute and unqualified discretion to withhold consent.

A game-changing verdict?

Is this the last word on ‘gig’ workers? Definitely not. We still, of course, have the various appeals in Uber’s working status litigation to come (along with various other lower profile cases).

There are also likely to be statutory changes coming. The Department of Business, Energy and Industrial Strategy (BEIS) is currently consulting on a reworking of the employee and worker definitions, to make them more relevant to the future world of work and a flexible, innovation-driven economy.