In Pimlico Plumbers Limited and another v Smith , the Supreme Court unanimously agreed that an Employment Tribunal was entitled to find that Gary Smith was a worker under section 203(1) of the Employment Rights Act 1996, rather than a self-employed contractor.
Background to the Pimlico Plumbers case
Mr Smith carried out work for Pimlico Plumbers from 2005 until 2011, following which he brought various employment claims on the basis that he was an employee and/or a worker.
The Employment Tribunal initially found that, although Mr Smith was not an employee, he was a worker under section 203(1) of the act and therefore most of his claims could proceed. Pimlico Plumbers denied that Mr Smith was a worker and claimed he was self-employed.
Supreme Court’s decision
Section 203(1) of the act states that a worker is an individual who enters into or works under something other than a contract of employment, where they undertake to “perform personally any work or services for another party to the contract” and that other party is not “a client or customer”.
Pimlico Plumbers argued that there was no requirement to personally perform work, as Mr Smith had a right to substitute someone else to carry out the work.
The Supreme Court pointed out that although Mr Smith had this right and it had a wide reach, there was no express right to substitute in Mr Smith’s contract. The contract was couched in terms directed to performance by Mr Smith personally; the right to substitute was significantly limited – work could only be substituted to other Pimlico Plumbers operatives who were bound by the same obligations as Mr Smith.
The company argued that they were a client or customer of Mr Smith, that they were not obligated to provide work nor did they have a right to supervise work. They also argued that Mr Smith was not obliged to accept work and he also bore some of the financial risks.
The Supreme Court, however, noted that there “were features of the contract which strongly militated against recognition of Pimlico as a client or customer” that reflected its “tight control” over Mr Smith. These included, among other things, requirements that Mr Smith wear the branded Pimlico Plumbers uniform and drive its branded van, and the contract references to “gross misconduct” and “dismissal”, as well as its inclusion of restrictive covenants.
For the above reasons, the court found that the tribunal had been entitled to find that Mr Smith was a worker under section 203(1).
Practical points to consider
The Supreme Court decision confirms that providing someone with a right to give work away to someone else will not in itself undermine the principle of personal performance – it is the degree to which this right can be used that will be determinative, as will the terms and specific wording of the particular contract.
The decision also shows that the larger the degree of subordination of one party to the other, the less likely it is for this relationship to be one of client or customer. It will be insufficient to simply rely on a lack of mutuality of obligation or a sharing of financial risk, if the other terms give one party a strong degree of control over the other.