Self-Employed, Worker or Employee? – Solicitors in Coventry

The Supreme Court, the UK’s highest court, has unanimously ruled that a plumber classed as self-employed was in fact a worker and should therefore be entitled to holiday pay and other basic workers’ rights, in a landmark case for the gig economy (a labour market characterised by the prevalence of short-term contracts and freelance work as opposed to permanent jobs).

Background

Gary Smith had worked solely for Pimlico Plumbers for six years. He was VAT-registered, paying self-employed tax and filed his own tax returns. Amongst other things, Pimlico Plumbers required Mr Smith to carry an identity card, wear a company branded uniform and to lease one of its vans, which displayed the company’s logo and was equipped with a GPS tracker. Mr Smith also had to work a minimum number of hours per week. The written agreement between Pimlico Plumbers and Mr Smith referred to Mr Smith as self-employed, but also contained provisions relating to ‘disciplinary action’, ‘wages’ and post termination restrictions governing his activities after he ceased working for the organisation.

Some aspects of Mr Smith’s conditions resembled self-employment, giving him certain elements of operational and financial independence and an entitlement to refuse work. The agreement also contained a clause giving him the option to substitute someone else to carry out his work.

Following a heart attack, Mr Smith made a request to work part time. The request was refused and the Company took away his van. Mr Smith claimed he was unfairly dismissed.

Decision

The court concluded that Mr Smith’s terms and conditions “betrayed a grip on his economy inconsistent with his being a truly independent contractor” and found that the Company exercised tight administrative control over Mr Smith and he undertook to do the work personally. The court found Mr Smith was a worker and not in fact self-employed.

Consequences

As a worker Mr Smith would be entitled to employment rights, such as holiday, sick pay, entitlement to the national minimum wage and protection from discrimination. The case has returned to an employment tribunal to determine his unfair dismissal claim.

The Future

The case is the latest in a long line of legal challenges on employment status. The judgment reinforces the point that simply labelling workers ‘self-employed’ is not indicative of the corresponding legal status. The reality of the relationship and the degree of bargaining power and mutuality of obligation between the parties remains crucial in determining an individual’s status.

The decision has the potential to impact the rights of many people classified as independent contractors across the UK, including those at gig economy organisations.

It is clear that a Contract drawn up by one party with all the power, holding all the cards, cannot pretend it represents a bargain agreed by two parties. It is perfectly possible for an individual to be self-employed in the eyes of HMRC, but a worker or employee for employment law purposes.

The Employment Rights Act dates back to 1996. The world of work has transformed dramatically since then. Employment relationships and contracts are a unique creation and any agreement can rapidly get left behind as the relationship evolves.

For further advice or assistance with any employment law matter, contact Lianne Payne, Head of Employment:  Lianne@askewslegal.co

Do you want to work with one of our employment solicitors in Coventry? You need to visit the Askews Legal website today. If you would like to get in contact with a member of our team, give us a call on 02476 231000. Alternatively, fill in the contact form on our website and someone will get back to you as soon as possible.

Askews Legal LLP – Solicitors Coventry.