Employment status looks set to become one of the key employment law issues in 2017. Following hot on the heels of the Uber and Citysprint decisions, the Court of Appeal has delivered its judgment in Pimlico Plumbers Ltd & Charlie Mullins v Gary Smith, finding that a plumber was a worker and therefore entitled to paid holidays.
In the words of the court, the case “puts a spotlight” on business models where an individual is intended to appear as a representative of a business while being denied employment or workers’ rights. While the case was not ground-breaking in terms of the law, it does bring into sharp focus issues around personal service, company standards and control of the workforce.
Mr Smith signed self-employment agreements in 2005 and 2009 under which he was subject to a Working Practices Manual. The content of these agreements was examined at length with two key issues emerging; was there a requirement for Mr Smith’s personal performance and was he obliged to complete a minimum number of hours?
The answer to the first of these questions depended on whether Mr Smith had the right to substitute another person to do the work. Had this right been unfettered, he would not have been required to undertake the work personally. However, where this right is exercised because the contractor in question is unable to complete the work or where the business is able to withhold consent for substitution, there is a personal performance requirement.
Neither the Manual nor Agreement contained an express right of substitution or delegation. Further, the agreement outlined his obligations in reference to ‘you’. It was upon this basis that Mr Smith was found to be required to personally perform the work. Importantly, the judgment stated that the fact Mr Smith was permitted to use apprentices or sub-contract specialist tasks should be viewed as a red herring and not evidence of Mr Smith’s right to substitute.
The Manual also included the provision for a normal working week of 5 days and a minimum of 40 hours. The Court of Appeal stated that even if this was not enforced, this did place an obligation on Mr Smith and that subsequently he should be considered a worker. It was Pimlico Plumbers’ position that when Mr Smith signed the second agreement in 2009, the contents of the Manual ceased to apply. This argument was rejected and presents an important lesson for businesses and employers alike to ensure they know exactly which terms apply to their workforce.
This case is the most recent in a string of cases on similar issues. While it does not change the law, it does highlight a growing awareness of employment status in the UK’s workforce and could lead to further claims from staff in similar circumstances. The most important lesson for employers is to ensure that their contracts and job titles reflect reality. Businesses need to be cautious when imposing obligations on those providing services in their name, particularly when those obligations amount to a requirement that work is performed personally by that individual. If you need assistance in balancing these competing objectives, get in touch with your Employment Solicitor.