UK Supreme Court rejects appeal from Pimlico Plumbers in landmark gig economy case

This week in the case of Pimlico Plumbers Ltd and another (Appellants) v Smith (Respondent) [2018] UKSC 29,the Supreme Court has unanimously dismissed an appeal of Pimlico Plumbers Ltd (PP) against an earlier decision of the Employment Tribunal in relation to the worker status of Mr Gary Smith, a plumbing and heating engineer. The Supreme Court decided that a Tribunal judge was entitled to find that Mr Smith was both ‘in employment’ for the purposes of the Equality Act 2010 and a ‘worker’ under the Working Time Regulations 1998, guaranteeing him the right to paid annual leave. Jennifer Sole and Jessica Bass, with assistance from our intern Jasmine Doust, summarise the decision:
The facts
Mr Smith worked for PP, a large plumbing business based in London and owned by the Second Appellant, Mr Charlie Mullins, between August 2005 and April 2011.
In 2011, Mr Smith began proceedings at the Employment Tribunal following his allegation that unlawful deductions had been made to his wages, that he had not been paid for his statutory annual leave, and he had been discriminated against by virtue of his disability. The judge found that Mr Smith was a worker.
PP and Mr Mullins appealed first to an appeals tribunal, and then to the Court of Appeal, to no avail. In February 2018, their appeal was heard by the Supreme Court, whom they asked to resolve the issue of whether Mr Smith was a ‘worker’ who had undertaken to personally perform his work or services for PP, or whether he was their client or customer.

PP argued that Mr Smith was under no obligation to perform the work, as he was permitted to substitute in other PP employees should he need cover, and was permitted to engage an external contractor, should he need additional help. The Supreme Court rejected that this amounted to a ‘right to substitute’, finding it was nothing more than mere shift-swapping.
Even if PP had enlisted the help of an external contractor, he continued to do the basic work himself and so this could not be regarded as substitution of performance. The judge at the Employment Tribunal was therefore correct to conclude that Mr Smith’s right of substitution was limited, and he was under an obligation to perform services personally.
On the second issue, Lord Wilson concluded that there were aspects of Mr Smith’s contract that meant that he was could not be a client or customer of PP. While he was able to reject offers of work and accept outside work, PP had tight control over his uniform, he drove a branded van to which a tracker was attached, he was obliged to carry a PP identity card and was required closely follow administrative instructions.
Additionally, his contract referred to ‘wages’, ‘gross misconduct’, ‘dismissal’, and covenants restricting his work-related activities following termination, all of which were inconsistent with his being an entirely independent contractor, despite his contract purporting to give him this status.
What are the implications?
In practical terms, it means that self-employed people whose services are largely encompassed within the business of others may be able to benefit from additional protections, including to National Minimum Wage, statutory holiday, a 48 hour working week, protection from unlawful discrimination and protection against unlawful deduction of wages. 
Therefore, if your contract refers to you as self-employed, but your work-related activities are heavily controlled by the Company you contract for, you should seek advice as to your true status. Likewise, if you run a business which relies on the engagement of self-employed contractors, who are not genuinely in business on their own account, you should rethink their status and your contracts (or lack of them!) to avoid costly claims.
Should you require any assistance with employment agreements or are concerned that there are issues of inequality or discrimination at your workplace, please do not hesitate to contact a member of our employment team.