Pimlico Plumbers: what lessons for the future?

15 June 2018

Whilst we're waiting for the outcome of the Government's consultation on employment status, anyone with an interest in this issue has been eagerly awaiting the Supreme Court judgment in Pimlico Plumbers vs Smith which came out yesterday.

Although the decision has been linked in media reports following yesterday’s decision with the gig economy, Charlie Mullins, founder of Pimlico Plumbers, has argued that this is not the case. Mr Mullins was quoted as saying "There is no comparison between a skilled tradesperson, like a plumber earning £150,000 a year, and a bike courier or minicab driver, struggling to make minimum wage." However, the fact remains that the principles being aired in the case apply equally to a company engaging cab drivers and a large organisation with a traditional business model utilising contingent workers.

Mr Smith originally argued that he was both an employee and worker of Pimlico Plumbers. The Supreme Court has upheld the decision that Mr Smith should be considered a worker for employment law purposes. This means that he is entitled to receive certain worker rights, such as National Minimum Wage, up to 5.6 weeks' paid holiday per year and company contributions to auto-enrolment pension.

So what new principles does Pimlico Plumbers teach us and are there any clues as to what a new statutory test of status might look like? The real answer is that the decision does not take us much further forward.

The main factor in the case (as in many others on the question of status) was the provision of personal service by Mr Smith and the fact that he could not in practice provide a substitute other than another Pimlico Plumbers operative to carry out the work. The Supreme Court has reinforced the fact that under current case law, this lack of a genuine right of substitution meant he was a worker. Also, the other relevant factors - the company’s “tight control over him”, wearing a uniform and driving a company van - all pointed towards worker status. All of this is quite in line with the recent decisions we have seen in the lower courts.

The next question is would the same decision on Mr Smith’s worker status be reached if either the recommendations of the Taylor Review or the latest Government consultation on employment status launched in February had been taken into consideration? The Government’s consultation document is not very directional in terms of its proposals and there were no less than 64 questions being asked of respondents about how the question of status should be decided in the future. The questions range from codifying the current law; to changing the focus of the factors that decide status; and implementing a completely new test, for example based on the length of the individual’s engagement.

The Taylor Review, which preceded the Government's consultation paper, provided a firmer position on how to define worker status. Matthew Taylor’s concern with the current employment case law, as exemplified by the Supreme Court decision, is that the question will often rest on the fact that someone can have almost every aspect of their work controlled by a business, but will not be a worker if the right of substitution exists. The Taylor Review felt that this was unfair, and considered that there should be a greater emphasis placed on control, with less on personal service. This would result in more people being protected. As Taylor writes “Ultimately, if it looks and feels like employment, it should have the status and protection of employment.” Nevertheless, in our view, the provision of personal service and the right of substitution that played such a key part in Pimlico Plumbers is likely to remain a very important indicator for worker/employment status.

Another theme to emerge from Pimlico Plumbers and the other decisions on employment status is that all of these cases are extremely fact specific. Changing one aspect of the working arrangements can lead to a different result on status. This has led to uncertainty and lack of clarity on status, for both businesses and individuals. This is something that the Government will wish to eradicate when new measures are introduced. However, the real challenge will be to devise a test that does result in certainty and clarity - it is hard to think of an objective and quantitative definition that really addresses the question of whether someone is in business on their own account.

A pertinent question in the Employment Status Consultation is “Given the current difference in the way that the employed and self-employed are taxed, should the boundary be based on something other than when an individual is an employee?”. In itself, this would be a radical move, but there could certainly be advantages to taxing “work” rather than going through a complex exercise of establishing the relationship between the engaging company, its customers, and the individual (or the individual’s personal services company).

In our view, any new status test should be defined with a clear eye on ensuring that the UK retains a global competitive advantage. To this end it’s noteworthy to recall that in recent cases on the status of minicab/taxi drivers, they have been found on substantially the same facts to be genuinely self-employed in France and Australia, employed in the US, but found to hold worker status in the UK. So clarity and certainty on status should be a cornerstone of any new legislation and any new tests should be robust in the face of greater technology and new ways of working.

Nick Willis

Nick Willis | Director
Profile | Email | +44 (0)20 7212 1659

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