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Pimlico Plumbers case; a spanner in the works for self-employment?

db69_1 Employed or self -employed?

On 13th June 2018 the Supreme Court, the highest court in the UK, gave its long awaited judgment in the Pimlico Plumbers case.

Mr Smith was a self-employed plumber who had been dismissed after six years of service. He claimed he was a worker and therefore entitled to certain rights such as holiday pay.  The court found in his favour despite Mr Smith being registered as self-employed and benefiting from this status. He claimed tax relief on a home office and had his wife on the payroll of his company.

Sound familiar? Many associates are labelled as self-employed and benefit from this status for tax purposes. However, could they challenge their status in the employment tribunal and also benefit from basic employment rights?

In recent years the courts have been awash with cases in respect of worker status. With the rise of the gig economy, companies are taking advantage of those who want a more flexible way to work by offering ‘self-employed’ contracts. But is this being done at the expense of basic employment rights?

It is often the most vulnerable that are affected by the imbalance of power in such relationships. A prime example of this is in relation to a case involving a City Sprint courier. The courier took the firm to the employment tribunal claiming they were a worker and won. However, instead of changing all contracts to worker status the firm changed the contracts 'to simplify the language in these, further clarifying the rights and flexibilities available to self-employed couriers who provide their services to us'. It should be noted that in order to enforce worker rights, a claimant will need to issue a claim at the tribunal. This can involve time and money, which many in lower paid jobs do not have.

There has been a further case in the employment tribunal against Hermes, in which their couriers have also been found to be workers. Tim Roache, GMB general secretary, said: “This is yet another ruling that shows the gig economy for what it is – old fashioned exploitation under a shiny new facade. Bosses can’t just pick and choose which laws to obey"

Pimlico Plumbers Decision

Turning now to the case in hand, however, in which Mr Smith was paid highly for the work he completed, he was also able to add a 20% mark up on materials which he got for discount via the company, and he had a great deal of flexibility in his role. Is this really a vulnerable individual being taken advantage of?

Either way the Supreme Court has determined that Mr Smith was a worker and as such should benefit from the rights associated with this. As a result of another recent decision on worker status that we reported on, his claim for holiday pay could now date back to the start of his employment.

The two main issues for the court to determine were whether Mr Smith had to perform the services personally and whether Pimlico was Mr Smith’s client or customer.

Personal Service

If a person has to personally perform the services under the contract it is likely that they will be deemed a worker. Here the court looked at Mr Smith’s right to send a substitute to determine if he had to personally perform the services.

The employment tribunal held that whilst Mr Smith could send a substitute for any reason such as illness, holiday or other reason, he could only send another Pimlico plumber. This was seen as akin to employees swapping shifts. As a result of this limitation the Supreme Court held Mr Smith had to personally perform the services.

In assicoate contracts, there will often be a right to send a locum. However, is this right fettered? Does the Practice get the final say as to who can undertake the locum role? Or do they merely require a minimum qualification, DBS check and performer number? This could have a bearing on whether the associate is a worker or self-employed. 

Business Undertaking

The court looked at whether Mr Smith was an independent contractor not in a relationship of subordination with the person who receives the services.

Pimlico tried to argue that they were the client of Mr Smith and he was a business in his own right. They relied on his tax return, which put his annual gross profit at £131,000, costs of materials around £53,000 and his net pre-tax profit at £48,000. The court disagreed with this for the following reasons:

  • Pimlico’s tight control of Mr Smith, including Mr Smith wearing branded clothing, driving a branded van and carrying an ID card;
  • Mr Smith’s obligations to follow administrative instructions from the control room;
  • The fact Pimlico placed a tracking device on Mr Smith’s van;
  • The severe terms as to when and how much Mr Smith would be paid (he was paid 50% of the fees paid by the customer) meant he was not economically independent.

As such the Supreme Court found that Mr Smith was not truly independent as there was an element of subordination.

Whilst many associates have clinical freedom and would not be required to wear a uniform, they do have to follow Practice policies and Practices decide the fees to be charged and when payment will be made. 

Conclusion

This case does not suddenly change the status of self-employed associates. As stated above, someone needs to challenge their status in order to be afforded the necessary employment rights; until then the status quo will continue. Even then, simply because one associate does challenge their status this will not automatically affect other associates are affected. It must be borne in mind that dental practices come in many shapes and sizes. 

However, this case is a warning for those that employ self-employed contractors of any nature. Now is the time to review contracts and ensure they are truly self-employed. If they are not, you need to take steps to protect your position as the risk to you is much greater.

If you have any questions about this article or need a contract reviewing, please feel free to contact Laura Pearce on This email address is being protected from spambots. You need JavaScript enabled to view it..

Laura Pearce

Senior Solicitor

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