The Court of Appeal has upheld the decision of an Employment Tribunal that a plumber employed by Pimlico Plumbers is a ‘worker’ within the meaning of section 230(3)(b) of the Employment Rights Act 1996 and the Working Time Regulations 1998 SI 1998/1833 and an ‘employee’ under the extended definition of that term in s 83(2) of the Equality Act 2010.
Smith was a plumber who worked solely for Pimlico Plumbers Ltd (PP Ltd) between August 2005 and April 2011. Following a heart attack, Smith claimed that he was unfairly or wrongly dismissed and claimed entitlement to pay during medical suspension, holiday pay and arrears of pay. PP Ltd argued that Smith was an independent contractor, as described in the contractual agreement between the parties entered into in 2005, which was replaced in 2009 by a more detailed agreement. The 2009 agreement made provisions for operatives to be issued with company identity cards, a uniform, the requirement to rent a PP Ltd van and a mobile phone to allow “operatives to work on a self-employed basis”. Furthermore, Smith accepted that he believed the arrangement to be on a self-employed basis and confirmed that he filed his tax returns as a self-employed person.
Smith had the ability to reject particular jobs and PP Ltd had no obligation to provide Smith with work. However, under the contract Smith was required to complete a minimum of 40 hours of work per week (it did not matter that this was not enforced), he was not allowed to work for anyone else, PP Ltd took half of the operatives’ labour costs and a week’s notice of written termination was required. The Court of Appeal upheld the Employment Tribunal’s view that this evidence clearly and consistently showed that relationship between PP Ltd and its operatives would only be successful if the operatives were given and took a minimum number of hours’ work.
In giving the lead judgment, the Master of the Rolls observed that the case put a spotlight on the fact that PP Ltd intended to appear to clients as if the operatives were working for the business and at the same time maintain that the relationship between the business and its operatives was one of client or customer and independent contractor. The Master of the Rolls cited the judgment of Lady Hale in the Supreme Court in Clyde and Co LLP and anor v Bates van Winkelhof (2014) UKSC 32 stating that ‘a distinction is to be drawn between (1) persons employed under a contract of service; (2) persons who are self-employed, carrying on a profession or a business undertaking on their own account, and who enter into contracts with clients or customers to provide work or services for them; and (3) persons who are self-employed and provide services as part of a profession or business undertaking carried on by someone else’.
The appeal questioned whether the Employment Judge was correct to hold that Smith fell into category (3) rather than (2). The Court of Appeal held that the Employment Judge had been correct as Smith was under an obligation to provide his services personally for a minimum number of hours per week and the degree of control exerted by PP Ltd over Smith was inconsistent with PP Ltd being a client or consumer of Smith.
The appeal was dismissed.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.