Pimlico Plumbers - A question of status
The ‘gig economy’… we’ve heard that phrase a lot recently. It refers to the five million or so people who get paid for each ‘gig’ they carry out – food delivery, courier delivery, taxi pick up, even plumbing work – more on this later.
There are some great benefits of gig economy work: flexible hours, control over the work you decide to do, fitting in with other commitments. For the company: paying the contractor only for the work they do – there are no benefits or regular salary payments to be made as the person doing the ‘gig’ is not on your books because they are normally classed as ‘self-employed’ contractors.
However, change is afoot! Late 2016 and into 2017, several Employment Tribunal rulings found that the way the company sees employment status between an individual and organisation could be wrong.
First, we had Uber in October 2016, where two Uber drivers argued that they should be treated as workers rather than self-employed because their actions were controlled by Uber, which meant they were employed by the firm. However, they didn’t even have basic workers' rights such as minimum wage or holiday entitlement. The Tribunal found that Uber’s defence that all Uber drivers were actually 30,000 small businesses linked by a common 'platform' was ridiculous, and it confirmed that drivers were ‘workers’ entitled to holiday pay, paid rest breaks and the national minimum wage. Uber appealed, and in November 2017, the Employment Appeals Tribunal agreed with the original decision. Uber is challenging the outcome again, and the case will be heard at the Court of Appeal sometime this year.
Next, we had City Sprint couriers in January 2017, where a Tribunal found a courier should be classed as a worker rather than self-employed. The courier had been making deliveries with CitySprint for more than two years but had not received a guaranteed wage, sick pay or holiday pay, because she was an independent contractor. She claimed she was a ‘worker’ as her workload was managed and directed by CitySprint – she had no control over this.
Deliveroo was also challenged at the end of 2017 – crucially though, the Tribunal found that Deliveroo deliverers are ‘self-employed’ and not workers because they could use substitutes to deliver for them – workers, on the other hand, must carry out the work personally.
A further case is now sitting in the Supreme Court, deliberating on who is a worker and who is self-employed. This is the case of Pimlico Plumbers, who appealed to the Court of Appeal in February 2017, when one of the plumbers, Gary Smith, was deemed a worker rather than self-employed by the Tribunal.
Mr Smith originally took the case to the Tribunal in 2012, claiming that he was unfairly or wrongfully dismissed by Pimlico Plumbers in May 2011 following a heart attack in January 2011. He had worked exclusively for Pimlico Plumbers between August 2005 and April 2011 on a ‘self-employed’ basis and was VAT registered and paying tax on the self-employed basis. Following a heart attack, he asked to reduce his days from five to three; this was refused by Pimlico, who took away his van. Mr Smith claimed to have been dismissed and the Tribunal found in his favour, meaning he was entitled to worker rights and benefits, including access to sickness and holiday pay, and reasonable adjustments. Pimlico appealed, first to the Employment Appeals Tribunal, and then to the Court of Appeal – the appeal was refused by both. In February 2017, the Court of Appeal found that Mr Smith was a worker because he was required to use the Pimlico branded van for work and cover a minimum number of hours a week.
The company then appealed to the Supreme Court, and the case opened on 20 February 2018. The case has been heard and the Justices will be reserving judgment until a later date. Chances are it’ll go the same way as the lower courts before it.
If that is the case, the outcome from the highest court in the land is likely to set some challenges to the gig economy, as more and more people’s working lives resemble Mr Smith’s and are therefore increasingly difficult to define. Generally, there are three forms of employment status: employee, self-employed and something in between, called a worker. The latter have some rights, but not as many as employees. Self-employed contractors have the bare minimum.
The Supreme Court ruling will therefore provide further guidance on who may fall into the worker category from the self-employed category, which could prove very costly for UK companies.
The Government is very aware of these issues and an extensive review into employment status has been undertaken. The Taylor Review has highlighted the issues in defining who sits neatly in each employment status category and the Government has now opened a period of consultation to gather thoughts on how to manage this going forward.
We wait to hear the outcome of the Supreme Court, and the practical measures the Government will take to tackle the situation. In the meantime, do you know exactly who is working for you? Best start checking now – it’s not always a clear-cut answer!
International Workplace’s employee relations team has excellent experience in assisting clients in understanding employment relationships and providing commercially focused, legal guidance to deliver pragmatic outcomes. Contact Tar Tumber on (0)333 210 1995 to find out how we can help you.