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The Supreme Court gets to grips with the ‘gig economy’ and employment rights

In a unanimous judgment in Pimlico Plumbers Ltd & another (Appellants) v Smith (Respondent) [2018] UKSC 29, an engineer has won in the Supreme Court against the appellant Pimlico Plumbers in a case required to determine that he was a ‘worker’ and not ‘self-employed.’
The Supreme Court gets to grips with the ‘gig economy’ and employment rights
Between August 2005 and April 2011 Mr Smith worked for Pimlico Plumbers Ltd before bringing Employment Tribunal proceedings for unfair dismissal to establish (among other things) that:

·      he had been an “employee” of Pimlico under a contract of service within the meaning of section 230(1) of the Employment Rights Act 1996; and

·      he had been a “worker” for Pimlico within the meaning of section 230(3) of the Act  and regulation 2(1) of the Working Time Regulations 1998 (SI 1998/1833).

While dismissing Mr Smith’s claim that he was an employee, the Tribunal found that:

·      Mr Smith had been a “worker” for Pimlico within the meaning of section 230(3) of the Act; and

·      He had been a “worker” for Pimlico within the meaning of regulation 2(1) of the Regulations.

Mr Smith’s case (and the appeals by Pimlico up to the Supreme Court) focus on the wording of the agreement between the parties which included terms relating to his personal conduct and a number of terms controlling the manner of his performance of the agreement.

To qualify as a worker in his case, Mr Smith showed that he was required to “perform personally” his work or services for Pimlico. The determination of the Court was that the right to substitute provided for within the agreement was limited by terms designed to direct Mr Smith’s personal performance to such an extent that the dominant feature of the contract was the obligation of personal service, despite references to substitution.

Against the argument that Pimlico was Mr Smith’s client or customer, the Court considered the controlling requirements of the agreement concerning, uniform, identity cards, tracking device, and the way in which instructions were given and received.

For both companies and individuals, the Pimlico case is a reminder that the terms of an agreement must be construed collectively to determine the dominant features (and thus the overall nature) of a contract, and that practical arrangements in the relationships between companies and individuals will aid Tribunals in determining whether what a contract claims to be on the face of it represents the true position.

At a time when companies are increasingly hiring independent contractors, the case is a timely reminder that businesses must be wary not to limit or restrict contractors from substitution in the drafting of contracts, and individuals must be live to the possibility that they are in reality 'workers' and protected by legal rights beyond those of independent contractors.

For advice on this or any element of employment law, contact Rupert Myers and the clerks of East Anglian Chambers on 01473214481.