Further to our article of last February, the Supreme Court has today handed down Judgment on the above case, dismissing the plumbing company’s appeal.
In short, Smith, a plumber who worked solely for Pimlico Plumbers (“the Company”) under a restrictive contract, was held by the Supreme Court to be a “worker” within the relevant employment legislation, despite being labelled an independent contractor in his contract. Smith’s original case against the Company will therefore be remitted to the Employment Tribunal for them to decide his claims against the Company (such as claims for holiday pay and unlawful deduction of wages) as a “worker”.
The Supreme Court unanimously agreed with the Judgments of the Courts below and said that:-
1. Substitutes – although Smith allegedly had the freedom to find substitutes to perform his assignments, his right was in fact informal and limited to substitutes already working for the Company. Further, the Company’s consent was required. Smith was therefore under an obligation to perform his services personally.
2. Subordination – the relationship between Smith and the Company was not one where the Company was a client or customer of Smith. The fact that he was obliged to wear the Company’s uniform, drive the Company’s branded van, carry an I.D. and was controlled in administrative aspects by the Company, for example as to when and how much he would be paid, supported the view that Smith was subordinate to the Company and therefore, that the Company was not his client.
3. Direction – the Supreme Court drew authority from European Law, which considers a person to fall outside the definition of an independent trader if the time, place, or content of an individual’s work is subject to direction and he does not share commercial risks with the person who has contracted with him. In other words, the more restrictive the contract between the parties, and the more independence it takes away from the contractor, the more likely it is that an individual’s self-employed status will fall away.
The Supreme Court’s decision does not provide any significant development to the legal definition of “worker” per se, as this case turned very much on its own facts, but it may stand as a reminder to companies that they may be held liable to individuals as employers or the like and it may act as a deterrent for companies using sham self-employed contracts to avoid liability under employment legislation.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.