The announcement last week of Pimlico Plumbers’ decision to appeal to the Supreme Court over the employment status of one of its plumbers, Mr Smith, was widely expected, not least because of extensively publicised comments made by Pimlico Plumbers founder, Charlie Mullins, to the effect that the Court of Appeal reached the wrong decision in the case.
Regardless of the outcome, the Supreme Court’s eventual decision is being eagerly awaited by employers of all sizes as the decision will have implications for any employer that engages individuals as self-employed consultants. Despite numerous disputes over the years, the question of employment status remains one of the most unsettled questions in employment law. At the same time, employers in many sectors continue to find commercially attractive reasons to use self-employed consultants. These might address varying needs including importing specific expertise into a business for a limited period, addressing fluctuating demand for skills or services, or responding to a request from a valued employee for a change in his or her relationship with the employer. The inherent flexibility of a consultancy arrangement is often so attractive to both parties that good will remains high and the potential risk of a dispute about status is of relatively little concern.
Nevertheless, the outcome of the case will be awaited with keen interest. The issue before the Supreme Court will be the same as the issue that has been decided in Mr Smith’s favour by the employment tribunal, the EAT and the Court of Appeal, namely was Mr Smith a worker or was he, as Pimlico Plumbers maintain, genuinely self-employed? The question affects an individual’s entitlement to key employment rights such as the national minimum wage, paid holiday and pension contributions and there are therefore significant financial and administrative consequences if an employer has to re-categorise some of its workforce.
Worker status depends on a wide range of factors, including the individual being under an obligation to do the work personally. The issue of personal service was examined in great detail by the Court of Appeal in this case as Mr Smith did sometimes pass work to others – either other plumbers on Pimlico Plumbers’ books or individuals with expertise that Pimlico Plumbers did not have. The Court of Appeal gave detailed guidance on how far an individual can have the right to pass some work to others, before losing worker status, but agreed that the limited right to pass work to others that Mr Smith enjoyed did not stop him being a worker in this particular case. The Supreme Court is likely to be asked to look at this guidance again and to find that the working arrangements at Pimlico Plumbers meant that Mr Smith could not have been a worker because he was able to engage others to undertake aspects of his work. Whatever guidance it gives will affect the drafting of any contract that provides for individuals to be entitled to engage a substitute to carry out some or all of the work required under the contract.
Pimlico Plumbers may also try to persuade the Supreme Court that the high level of earnings that its plumbers enjoy is a relevant factor and makes this case different from those involving more obviously exploited gig-economy workers who earn minimum wage rates. Pimlico Plumbers’ own press release following the announcement that it intends to appeal to the Supreme Court says this explicitly. However, it would be surprising if the Supreme Court thought that differences in earnings in and of themselves had any relevance to the principles involved. A higher level of earnings can and often is indicative of a stronger bargaining position in an employment type relationship. It may, therefore, support an argument that an individual who signed a document in which the relationship is described as one of self-employment did so freely and intentionally. But previous case law suggests that a higher level of earnings would not by itself have any impact on the individual’s status.