Hogan Lovells

Key Dates

Judgment given on 13 June 2018.


Summary

The Supreme Court has confirmed in Pimlico Plumbers Ltd v Smith that a plumber engaged on the basis that he was self-employed was really a worker and as such entitled to annual leave and protection against unauthorised deductions from pay and discrimination.  The Court held Mr Smith was a "worker" for the purposes (among other things) of section 230(3) of the Employment Rights Act 1996.  It did not consider whether he was a "worker" for auto-enrolment purposes but the relevant definition (in section 88 of the Pensions Act 1988) is substantially the same as the definition in section 230(3).

To be a worker, an individual has to be engaged under a contract under which he has to provide personal service, in circumstances where he is not running a business on his own account. At an earlier stage, both the Employment Appeal Tribunal (EAT) and Court of Appeal decided that Mr Smith satisfied that test while working for Pimlico Plumbers (Pimlico). There were two issues for the Supreme Court to consider. First, whether Mr Smith was under an obligation to provide personal service in circumstances where he had a limited right to send a substitute to work and second whether he was running his own business.

On the substitution point, the Supreme Court found that the contractual arrangements did not include an unfettered right to appoint a substitute. Instead Mr Smith had a limited right to substitute his own performance with that of another plumber working for Pimlico. The dominant feature of the contract between Mr Smith and Pimlico remained personal performance by him, as indicated by the terms of the contract. The tribunal was entitled to find that the requirement for personal service was satisfied.

The tribunal was also entitled to find that Mr Smith was not operating a business on his own account. Under the terms of the contract, Pimlico was obliged to offer available work to him, which meant an umbrella contract existed between them. It was particularly relevant that Mr Smith was working as an integral part of the Pimlico operation and that it had tight control over him in terms of his uniform, his vehicle, the requirement to carry an identity card, how, when and how much he was paid and the administrative instructions given to him.



Date Accessed: 03/12/2021