13 Jun 2018

Supreme Court rules on key "employment status" case

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In the high profile case, Pimlico Plumbers Ltd and another (Appellants) v Smith (Respondent), the Supreme Court has dismissed an appeal by Pimlico Plumbers concerning the employment status of Mr Smith.

Facts

Between August 2005 and April 2011 Mr Smith worked for Pimlico Plumbers Ltd ("Pimlico") under two written agreements which were not clearly drafted. In August 2011, Mr Smith issued proceedings alleging that he had been unfairly dismissed, that an unlawful deduction had been made from his wages, that he had not been paid for a period of statutory annual leave and that he had been discriminated against by virtue of his disability. The Employment Tribunal found he was not an employee, and therefore was not entitled to claim unfair dismissal. However, the Tribunal found that he was a "worker" for the purposes of the unlawful deductions from wages and annual leave claims, and he satisfied the relevant test under the Equality Act 2010 of being "in employment" for the purposes of his discrimination claim. The Appellants appealed the decision which was dismissed by the Employment Appeal Tribunal and Court of Appeal.

Supreme Court judgment

The Supreme Court has unanimously dismissed the appeal. Key findings of the judgment include that the Tribunal was entitled to find that:

  • Mr Smith had undertaken to provide a personal service to Pimlico. The terms of Mr Smith's contract were clearly directed to personal performance by Mr Smith and whilst there was a right of substitution (although not expressly included in the contract) this was extremely limited by the fact that the substitute had to be another Pimlico operative. Accordingly, the Tribunal was entitled to conclude that Mr Smith was a worker under the relevant test; and
  • Pimlico cannot be regarded as a client or customer of Mr Smith. Whilst there were factors that pointed towards Pimlico being a customer or client (including the fact that Mr Smith was free to reject a particular offer of work, and to accept outside work if none was offered by any of Pimlico's clients, that he bore some financial risk of the work and the manner in which he undertook the work was not supervised by Pimlico) there were other features that more strongly suggested no client or customer relationship. These features included: the restrictive covenants on Mr Smith's working activities post-termination with Pimlico; strict terms as to when and how much Pimlico was obliged to pay him; Pimlico's stringent control over administrative aspects of any job; and Pimlico's requirement that he should wear a branded Pimlico uniform, drive a branded van and carry its identity card.

Comment

The Supreme Court judgment largely confirms what we already knew - that cases on employment status are particular to the specific facts of each case. Accordingly, whilst the decision has not moved the law on in any significant respects, it reinforces that it remains crucial to analyse the familiar employment status tests (including personal service, mutuality of obligation, degree of control) on the particular facts of each case.

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