Pimlico Plumbers – Supreme Court confirms worker status

Pimlico Plumbers Ltd and another v Smith [13.06.2018]

In a high-profile judgment, the Supreme Court today dismissed Pimlico Plumbers’ appeal, thereby allowing Mr Smith’s claims as a ‘worker’ to be heard by the Employment Tribunal.

Background

Smith carried out plumbing work for Pimlico Plumbers, the well-known full-service plumbing and maintenance company, between 25 August 2005 and 28 April 2011. After his engagement terminated, Smith brought various claims in the Employment Tribunal including for unfair dismissal, disability discrimination and holiday pay. A crucial jurisdiction issue to each of those claims was Smith’s employment status.

A preliminary hearing took place to address whether:

  • Smith was an employee for the purposes of unfair dismissal law
  • Smith was a ‘worker’ for the purposes of holiday pay and wages protection law
  • Smith was in employment for the purposes of discrimination law.

Employment Tribunal’s findings

The Employment Tribunal decided that Smith was not an employee, but that he was a worker and his working situation met the definition of being in employment for discrimination law purposes. Accordingly, the Tribunal had jurisdiction to consider the complaints of disability discrimination, holiday pay as well as in respect of unauthorised deductions from wages, but not unfair dismissal.

Pimlico Plumbers’ appeals to the Employment Appeal Tribunal and the Court of Appeal were dismissed.

Key issues

To be a ‘worker’ for the purposes of holiday pay and wages protected law, or to be in employment for the purposes of discrimination law, there must be a contract between the parties whereby the individual is obliged to personally perform work for the other party in circumstances where that other party is not a client or customer of a business carried on by the person.

There was no express right in the contract between Smith and Pimlico for Smith to provide a substitute person to work in his place and, despite some evidence that Pimlico’s plumbers could swap assignments and (with Pimlico’s consent) bring in external contractors when additional skill sets were needed, the courts found that this was not inconsistent with a fundamental obligation on Smith to provide personal service.

Pimlico as client or customer?

A further issue was whether, even if there was an obligation to provide personal service, Smith was acting in a genuinely self-employed basis such that Pimlico was his customer. There was some inconsistency in the contractual material which suggested on one hand that Pimlico was not obliged to offer any work and Smith was under no obligation to accept any work offer, but on the other hand that Smith should complete a minimum of 40 hours’ work per week.

The courts found that these provisions could be reconciled; there was sufficient obligation on Smith to work to mean he was a worker. The courts also considered that other elements of control exercised by Pimlico (for example a requirements to drive a Pimlico branded van and wear a Pimlico uniform) were inconsistent with Pimlico being a customer of Smith.

Supreme Court decision

The Supreme Court has now further rejected Pimlico’s appeal and endorsed the previous decisions of the Courts and Tribunal.

As regards personal service, the Supreme Court remarked that “The tribunal was clearly entitled to hold, albeit in different words, that the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance. To the extent that his facility to appoint a substitute was the product of a contractual right, the limitation of it was significant: the substitute had to come from the ranks of Pimlico operatives, in other words from those bound to Pimlico by an identical suite of heavy obligations. It was the converse of a situation in which the other party is uninterested in the identity of the substitute, provided only that the work gets done. The tribunal was entitled to conclude that Mr Smith had established that he was a … worker - unless the status of Pimlico by virtue of the contract was that of a client or customer of his.

On whether Pimlico could be described as a client or customer of Smith, the Supreme Court noted that “…there were features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor.

Comment

Employment status is an increasingly hot topic as a number of well-known businesses such as Uber and Deliveroo have found themselves in the courts in recent years facing challenges to the stated employment status of those who provide their services.

As with all of these cases, they are extremely fact-specific and do not necessarily set particular precedent value in other cases.

What Pimlico does again underline however is that the courts are willing to examine the totality of the facts and the day-to-day reality of any given situation in determining an individual’s employment status, and will not take at face value what a contract may assert about status or about working arrangements. On the particular issues of personal service and customer status, Pimlico gives useful guidance on the principles that might tip the balance either way.

Clients who engage with contractors to provide end services to customers are well advised to review their contractual documentation and their working arrangements in practice to consider if they are at risk of such contractors (or indeed HMRC) asserting that there is in fact a different employment status than that stated.

Employer’s health and safety obligations

The question of an individual’s employment status is also sometimes a matter of dispute in the health and safety context, when:

  • Considering whether the defendant owed the injured worker relevant common law or statutory duties
  • Determining whether the defendant is vicariously liable for a worker’s negligent acts.

This is increasingly the case as certain industries move away from traditional employer/employee relationships to a range of alternative forms of engagement, whether an increased use of agency workers or the kind of engagement illustrated by Pimlico.

The courts will consider all aspects of the relationship, as in Pimlico, but have shown considerable flexibility when determining whether the relationship between the defendant and negligent worker is such that it would be ‘just and reasonable’ to impose civil liability on the former for the negligent, or indeed criminal, acts of the latter.