The Supreme Court has held in Pimlico Plumbers v Smith that despite the fact that the claimant was described as "self-employed", he had worker status entitling him to bring claims for discrimination, holiday pay and unauthorised deductions from wages. Since then a group of Hermes couriers have also won their fight to be treated as workers rather than self-employed contractors in a Leeds employment tribunal. "Gig economy" cases are gaining momentum and a label of "self-employed contractor" will not be sufficient to deny individuals workers' rights.
Mr Smith's contract with Pimlico Plumbers (PP) stated that he was an independent contractor in business on his own account. He was subject to restrictive covenants and had to drive a PP branded van and wear a PP uniform. In addition to providing his own materials and tools he bore a significant proportion of the commercial risk. If a customer failed to make a payment he was not paid, and he was responsible for sorting out his own insurance.
The Court noted that in order to qualify as a worker Mr Smith needed to have undertaken to personally perform his work or services for PP. Despite a finding that Mr Smith had some ability to substitute another operative in his place, the dominant feature of Mr Smith's contract was still an obligation of personal service. As a result he could not be said to be genuinely self-employed.
Take note: This decision is not unexpected. It echoes other recent decisions which have found against Uber, CitySprint and Addison Lee among others, and proves that organisations attempting to operate flexible labour models will struggle to avoid worker and potentially even employment status. Much turns on the ability to substitute without restriction. Workers can claim some but not all employment rights including discrimination, protection under the Working Time Regulations, whistleblowing protection and protection under the Part Time Workers Regulations.
Following the Taylor Review of Modern Working Practices, the government accepted that there needs to be greater clarity and certainty surrounding employment status. It launched a consultation earlier this year asking whether the existing employment status tests are still relevant to the modern workplace and how greater certainty can be achieved. It will be interesting to see whether this will result in changes to the law on employment status, although any changes are unlikely to happen soon.
Worker status cases remain fact specific so this will not apply to all consultants or free-lancers. The right to substitute and the degree of control or subordination remain key tests. This is a sensible time to review all consultancy terms and conditions.
This article is taken from HR Law - July 2018.