Landmark decision for workers and independent contractors classification
Pimlico Plumbers and another v Smith  UKSC 29, will remain a key authoritative legal source when it comes to employers classifying their staff as ‘workers’ or ‘independent contractors’ for the foreseeable future.
What was in dispute?
The case questioned whether an individual (Mr Smith) of Pimlico Plumbers (PP) was a worker or an independent contractor under s.230(3)(b) of the Employment Rights Act 1996, the Working Times Regulations 1998 and employed under the Equality Act 2010.
The Employment Tribunal had to focus on two issues in order to decide whether Mr Smith was a worker or an independent contractor. The tribunal examined:
- Whether or not the service provided was a ‘personal service’ on the part of Mr Smith; and
- if Mr Smith expressly dealt with Pimlico as a ‘client or customer.’
Contractually, it stood that Mr Smith was ‘self-employed’ as PP was not obliged to offer him work, nor was Mr Smith obliged to accept the work offered. There were, however, conditions imposed upon Mr Smith which required interpretation regarding his working status, and whether PP were a ‘client or customer’ of Mr Smith. The tribunal expressed that PP had a ‘tight control’ over Mr Smith, which led to the finding that PP were not to be classed as a ‘client or customer’ due to this restrictive element. This, ultimately, meant that Mr Smith had to be considered as a worker.
What conditions were imposed on Mr Smith?
The conditions imposed upon Mr Smith were:
- To work a minimum of 40 hours per week;
- to hire and drive a PP branded van;
- to wear a PP uniform and carry a PP identity card; and
- to follow the administrative instructions of PP’s control room.
Mr Smith’s contract included professional employment terminology such as:
- gross misconduct; and
Had Mr Smith been legitimately self-employed, then PP would not have been responsible for ‘wages’ or ‘dismissal’.
What does this mean for you?
Whilst not hard and fast rules, you should put thought into factors such as equipping your staff with work vehicles, uniform, ID cards and requiring them to carry out work themselves personally, as this may contribute to altering the individuals status.
Imposing restrictions upon workers (which may include individuals thought to have been self-employed), such as defined working hours and locations, but then failing to provide them with equal benefits that full-time workers enjoy, such as paid holiday or pension schemes, may lead to even further issues.
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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