Pimlico Plumbers Case
The ruling is likely to have far-reaching consequences.
First of all, it will affect gig companies, such as Uber and Deliveroo. The matter, however, is not limited to technology companies. The number of self-employed contractors is short of five million. Quite a few companies will have to reconsider how they do business.
Gary Smith paid self-employed tax and was VAT registered. For six years, from 2005 to 2011, his only client was Pimlico Plumbers Ltd. He wore a branded uniform and drove a branded van.
In 2011, after a heart attack, he asked for a three-day week. The request was rejected, the Pimlico Plumbers van he rented was taken away and he was dismissed. Gary Smith claimed that, despite his status of self-employed, he was the company’s worker and, therefore, enjoyed the employment protection including provisions for illegal dismissal.
The case went through all stages, starting from the employment tribunal and each time the decision was against the company.
Delivering judgment, Lord Wilson said: “Although the contract did provide him with elements of operational and financial independence, Mr Smith’s services to the company’s customers were marketed through the company.”
“More importantly, its term enabled the company to exercise tight administrative control over him during his periods of work for it; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.”
Some aspects of Smith’s conditions resembled self-employment, such as the entitlement to refuse work, the judgment said, but others “betrayed a grip on his economy inconsistent with his being a truly independent contractor”. These included the fact that he wore a branded uniform, had a tracker in his branded van and carried an identity card.
The decision will be quite painful for business.
Outside the court, Charlie Mullins, the founder of Pimlico Plumbers, said he was considering an appeal against the decision to the European Court of Human Rights in Strasbourg.
“It’s not over yet,” Mullins said. “We are going to take it to the next stage if we can and prove this chap was self-employed. At the worst, we will go back to the tribunal and fight it. Around 4.8 million subcontractors in the UK will be affected by this decision. The government needs to step in and provide clarity to the employment laws.”
Mullins has a point. Many companies rely on independent contractors. Now significant uncertainty has been introduced into their business.