This subject is currently receiving much more publicity and media coverage than it has in previous years. So far this year, we have seen many news features and documentaries about businesses such as Uber and Deliveroo, who have the business model of using drivers/riders that they deem to be “self-employed”. It remains to be seen if they can continue to operate by “employing” people on this basis, due to a recent Court of Appeal judgement. The case of Pimlico Plumbers & Charlie Mullins v Gary Smith indicates that such working arrangements give staff the status of being a “worker”.
Here at Alcumus, we offer an HR advice line, and the Pimlico Plumbers case could have been extracted from any of our advice calls on this subject. The case covers many of the aspects we have to address when trying to determine if someone has any legal rights to be classed as a worker or an employee, as opposed to being self-employed. If you have ever called our advice line on this topic, this case may highlight why our Consultants ask you many questions before we can steer you in any direction on this complex subject.
The Court of Appeal heard the case of Pimlico Plumbers V Gary Smith in order to determine if Mr Smith (a plumber) was an employee or self-employed. It ruled that Mr Smith was, in fact, a “worker”, which therefore means that he does have a degree of employment rights and protection. This ruling may have come as a surprise to many employers – although Mr Smith wore Pimlico Plumbers uniform and drove a van with Pimlico’s logo, the written agreements in place between the two parties gave the impression he was in business on his own account.
Additionally, Mr Smith was paid against receipt of invoices, personally accounted for tax, and was VAT registered. He was required to provide his own tools, equipment and materials, and maintained his own insurance. Although required to work a minimum number of weekly hours, he could choose particular working hours and could reject particular jobs. Pimlico was under no obligation to provide work if none was available. Many employers would expect these indicators to sway the Court of Appeal towards deciding that Mr Smith was self-employed.
However, the crux of the decision rested upon a very crucial point of “personal service”. Mr Smith was expected to carry out the plumbing duties himself, and he was not allowed or authorised to send another plumber to carry out the duties on his behalf. Whilst Pimlico could use any plumber they wished to call upon, if Mr Smith agreed to carry out work for them he was agreeing that only he would do the work, so he could not send someone else. It is this point which awarded him a “worker” status.
Businesses should bear in mind that legislation such as The Working Time Regulations (including holidays and holiday pay) covers workers and not just employees. It is, therefore, important to establish the correct working relationship from the outset, and ensure that the relevant terms are agreed and confirmed in writing. Using the points raised in this case, it is easy to see why businesses such as Uber and Deliveroo may have to quickly reconsider their business models, or be prepared to accept that their drivers/riders could soon be awarded some kind of worker or employee status.
If you are in any doubt as to whether or not people are workers, employees, or self-employed, please call your HR Consultancy team for guidance.