116: Supreme Court confirms that plumber was a worker, not an independent contractor

In Pimlico Plumbers Ltd v Smith, the Supreme Court has confirmed that a plumber was a worker, not a self-employed contractor as stated in his contract. This decision means that he can now proceed with his claims for unlawful deductions from wages, paid holiday, and disability discrimination.

Mr Smith worked as a plumbing and heating engineer for Pimlico Plumbers Ltd for over five years. His contract with the company described him as an independent contractor and he was registered for VAT, submitted invoices, and filed tax returns on the basis that he was self-employed. Mr Smith’s contract was terminated four months after he suffered a heart attack. He subsequently brought various claims in the Employment Tribunal, where his employment status was considered as a preliminary issue. The Supreme Court has now upheld the rulings of the Employment Tribunal, Employment Appeal Tribunal (EAT) and Court of Appeal that Mr Smith was a worker, not an independent contractor.

The Supreme Court noted that Mr Smith took on a significant proportion of the commercial risk, provided his own tools and materials, was personally liable for his work, and was not supervised by the company. However, other terms of the contract were not indicative of Pimlico Plumbers being a client or customer of Mr Smith. The following features of their working relationship were particularly relevant to the Court’s decision:

• Mr Smith was required to carry a Pimlico Plumbers identity card, wear a branded uniform, and use a branded, tracked van leased from the company;
• Pimlico Plumbers had tight control over payment terms and the administrative aspect of all jobs;
• Mr Smith’s contract referred to ‘wages’, ‘gross misconduct’ and ‘dismissal’. He was also subject to post-termination restrictive covenants, including a three month non-competition covenant;
• the terms of Mr Smith’s contract clearly pointed to an obligation of personal performance. Although he could appoint another Pimlico operative to do a job he had quoted for, but no longer wished to perform, this was more like swapping a shift than providing a substitute; and
• Mr Smith’s contract stated that the company was not obliged to offer him work and he was not required to accept work, but also that he should complete a minimum of 40 hours per week.

The Supreme Court observed that the contractual documents in this case were confusing, and confirmed the EAT’s view that they had been ‘carefully choreographed’ by Pimlico Plumbers to serve their inconsistent objectives of wanting operatives to be self-employed, whilst also wanting to present them to the public as part of its workforce. As this case illustrates, the courts will assess contractual terms in the context of the reality of a working relationship. Where, in practice, the employer retains a high degree of control, and does not allow an individual to provide a substitute, they are more likely to be classed as a worker, even if the contract states otherwise.