Mr Smith worked as a self-employed engineer for Pimlico Plumbers (PP). After his contact was terminated, he sought to bring various claims in the Employment Tribunal. To be eligible to bring his claims, he had to be a ‘worker’ rather than a self-employed contractor. To qualify as a worker, Mr Smith had to demonstrate:
- Personal service – that is, that he was required to perform work personally for PP; and
- that PP was not his client or customer.
The Employment Tribunal held Mr Smith was a worker and this decision was upheld by the Employment Appeal Tribunal and the Court of Appeal. PP appealed to the Supreme Court.
Regarding the 'personal service' requirement, whilst Mr Smith could field a substitute to do his work, the Supreme Court said that his ability to do this was significantly limited. The substitute had to be a fellow PP operative who was bound by the same onerous PP rules about their conduct and appearance. This meant that the substitution power was very limited, being more akin to an ability to swap shifts with a work colleague.
Regarding the ‘client or customer’ issue, PP argued that it was genuinely Mr Smith’s client or customer as he was entitled to reject work, was free to take up outside work, PP did not supervise Mr Smith’s work and he bore some financial risks. However, the Employment Tribunal had decided that such factors were outweighed by other features of the relationship that militated against PP being a client or customer, for example, the requirement to wear a PP uniform, to drive a branded van, PP’s control over when and how much pay Mr Smith received and the post-termination covenants to which Mr Smith was subject. Ultimately the Supreme Court said that the Employment Tribunal was entitled to conclude that PP was not a client or customer of Mr Smith.
Accordingly, Mr Smith qualifies as a ‘worker’ and is now entitled to continue with his claims for discrimination, holiday pay and unlawful deductions.
Why this matters
The Supreme Court’s decision is unsurprising given that the question of employment status is heavily fact specific and so is for the Employment Tribunal to determine.
Whilst the judgment doesn’t materially develop the law in this area, this is the first recent Supreme Court decision in a line of cases where the courts have held that individuals contracted to provide services on a self-employed basis are in fact workers and therefore entitled to some employment rights. It is notable that many of the recent cases, like this one, involve business models where the employer is keen, on the one hand, to present its operatives to the public as part of its workforce but, on the other, it wants those people to be self-employed in business on their own account. A business which exerts a substantial measure of control over its operatives, as in this particular case, will find it harder to argue that its operatives are genuinely self-employed.
Employment status remains a hot topic given the continuing growth of the gig economy and the Government’s current consultation on reforming the test for employment status in light of the Taylor Review of Modern Working Practices. We can therefore expect more developments in this area in the coming months.