Pimlico Plumbers - calm down everyone!
On Friday, 10 February 2017, numerous newspapers and news outlets reported on the case of Pimlico Plumbers (“PP”) v Gary Smith.
According to the Daily Mail, Mr Smith’s victorious solicitor had commented "the decision brings welcome clarity to the issue of employment status relating to work in parts of the economy." Somewhat curiously, Pimlico plumbers boss Charlie Mullins was also reported to say "I am happy. This gives some clarity" whilst indicating that a further appeal to the Supreme Court was under consideration.
The legal director of the GMB Union commented that the case was "yet another victory for the bogus self-employed who have been treated appallingly by their employer."
The Master of the Rolls put it a little more calmly: "This case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that... there is a legal relationship of... independent contractor rather than employer and employee or worker."
But: a landmark judgment…..?
Well, maybe not.
When Mr Smith joined PP on 25 August 2005 he entered into their standard form of agreement. In 2009, a longer and more detailed agreement was substituted.
The clear aim of the agreements was to establish that Mr Smith was to be self-employed, even though he was required to drive the company van (for which he had to pay PP), wear the company's uniform and comply with some fairly onerous rules.
Everything proceeded happily and, in accordance with the terms of the contracts, Mr Smith invoiced PP for the work that he did (although he was not paid if the client did not pay). He was registered for VAT. He was responsible for his own tax and national insurance contributions.
He had to pay for materials. In his last full year of working for Pimlico plumbers, Mr Smith received £130,753 but incurred expenses of £82,454, of which £52,887 was on materials.
Mr Smith suffered a heart attack in January 2011 and his association with PP was brought to an end on 3 May 2011, Mr Smith then brought a number of claims before the employment tribunal.
Although these claims can be brought only by employees, Mr Smith complained that he had been the victim of unfair dismissal, wrongful dismissal (meaning that he had been dismissed in breach of contract) and entitlement to pay during medical suspension. He maintained that, despite what the paperwork said, he had been an employee all along.
He also claimed holiday pay, arrears of pay and three different sorts of discrimination, based upon disability. These claims can be brought by employees but not by someone who is genuinely self-employed and running his own business; they can however be brought by someone who is in the category of “worker", as defined in the legislation.
I ought to mention here that, for the purposes of employment law, someone who works for another and is not a volunteer can fall into one of three categories:
1.an employee, that is someone engaged under a contract of employment;
2.genuinely self-employed, which means that the person for whom they work is effectively their client or customer; or
3.the intermediate category of "worker".
An employee is entitled to the widest range of rights. He (or she) is protected against unfair dismissal, has rights on redundancy and must receive statutory sick pay, maternity or paternity leave or pay and a whole host of other things. These include protection against discrimination, and entitlement to paid holiday and the protection of wages.
Someone who is genuinely self-employed has relatively few rights in law outside the strict wording of the contract into which he or she might have entered.
A worker is somewhere in the middle. He/she does not have the rights of an employee, although the law does give an entitlement to some protection, particularly with regard to paid holiday, discrimination and the protection of wages.
To be worker, he/she has to work under a contract “ whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”
As indicated above, Mr Smith started off by claiming that he was an employee and entitled to a wide range of protection. The employment judge found that he was not an employee although he was found to be a “worker”.
Both parties appealed. The Employment Appeal Tribunal backed the employment tribunal and also decided that Mr Smith was a worker, not an employee.
Mr Smith then gave up on his argument that he was an employee. However, PP appealed. They wanted Mr Smith to be found to be genuinely self-employed. The decision as it stood would probably cost them a lot of money if all of those plumbers working for them under the same contract as Mr Smith were found to be entitled to paid holiday (at least four weeks a year), an entitlement to be paid the minimum wage and other forms of protection as well.
PP ran a number of arguments. The principal one was that since Mr Smith had been permitted to delegate his work to another plumber from time to time, that removed the necessary element of personal service.
The Court of Appeal did not accept this.
The judgement runs to 36 pages and 147 paragraphs. I do not propose to analyse it in any great detail but merely concentrate on a couple of points.
What was telling, so far as the Court of Appeal was concerned, was that neither the 2009 agreement nor PP’s extensive manual actually contained any provision which specified that Mr Smith could appoint a substitute to do work that was allocated to him. PP just routinely allowed it. Presumably they would still be paid and therefore would not worry who did it.
Before anyone else seeks to comment that PP v Smith is some sort of groundbreaking decision benefiting an oppressed work force, one might have regard to the comments of one of the Court of Appeal judges, who said (my emphasis)
"… The resolution of this issue has depended on an analysis of the contradictory and ill thought out contractual paperwork in the context of the judge's findings about what happened on the ground. That means that although employment lawyers will inevitably be interested in this case-the question of when the relationship is genuinely casual being a very live one at present-they should be careful about trying to draw any general conclusions from it."
So the case turned on what was actually written down and then the reality of the situation.
The report of the case on the BBC website said that Mr Mullins had already changed PP’s contracts. You can bet that they provide for substitutes now.
"Like our plumbing, now our contracts are watertight," he is reported to have said.
PP’s is a familiar model. However, the case does not mean that those engaged in the gig economy are always workers. It certainly does not mean that PP plumbers, on Mr Mullins’ new form of contract, are workers. What it does mean is that Mr Smith, having the contract that he did and the factual situation being what it was, was found to be a worker. That does not mean that anyone else in a similar situation would inevitably be able to say the same.
Postscript: Mr Smith presented his claim to the employment tribunal on 01 August 2011. As indicated above, he made a number of claims. Correctly, an employment judge decided that before any of those claims could be considered, Mr Smith's actual status needed to be considered. Therefore a pre-hearing review (now what is called a preliminary hearing) was held to decide whether Mr Smith was an employee, a worker or genuinely self-employed. That was heard in January 2012 and the employment tribunal's decision was published in April 2012.
Now, something over 4 1/2 years later, the question of Mr Smith's status has indeed been determined (unless Mr Mullins decides to take the matter to the Supreme Court). That means that the case can now go back to the employment tribunal who will consider whether Mr Smith was discriminated against and due holiday and other pay. It is not known when these matters might be heard.
14 February 2017