True Employment Status: the Case of Plimico Plumbers

An employee is someone who works under an employment contract.

In employment law, a person’s employment status helps determine: their rights and their employer’s responsibilities. Thereby, an employee is someone who works under an employment contract. Employers must know each worker’s status for both employment law and tax law, forit is possible for a person to have different employment status in tax law.

Employment rights

All employees are workers, but an employee has additional employment rights and responsibilities which don’t apply to workers who aren’t employees.

These rights include all of the rights workers have:

• Pay statutory maternity,
• Paternity, adoption and shared parental leave and pay (workers only get pay, not leave),
• Minimum notice periods if their employment is ending

For example, if an employer is dismissing them they are entitled to protection against unfair dismissal, the right to request flexible working, time off for emergencies, statutory redundancy pay.

Some of these rights require a minimum length of continuous employment before an employee qualifies for them. An employment contract may state how long this qualification period.

Someone who works for a business is probably an employee if most of the following are true:

• they’re required to work regularly unless they’re on leave, for example holiday, sick leave or maternity leave
• they’re required to do a minimum number of hours and expect to be paid for time worked
• a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done
• the business deducts tax and National Insurance contributions from their wages
• they’re entitled to contractual or Statutory Sick Pay, and maternity or paternity pay
• the business’s disciplinary and grievance procedures apply to them
• they work at the business’s premises or at an address specified by the business
• the business provides the materials, tools and equipment for their work
• their contract, statement of terms and conditions or offer letter (which can be described as an ‘employment contract’) uses terms like ‘employer’ and ‘employee’.

If most of these don’t apply, then the worker is likely to be self-employed.

The case, Pimlico Plumbers and Charlie Mullins v Gary Smith, was originally brought by Smith to the Employment Tribunal (ET) in 2012, where he argued that he was wrongfully dismissed by Pimlico Plumbers in May 2011 after he suffered a heart attack in January 2011. He had worked for the plumbing organisation for six years from August 2005. When Mr Smith asked to reduce his hours due to ill health, Pimlico Plumbers refused and eventually repossessed his company-provided work van. In 2011, he filed a claim for unfair dismissal as an employee, discrimination on grounds of disablement, denial of sick pay and holiday pay under both the Employment Rights Act and the Equality Act. Indeed, the Equality and Human Rights Commission funded Smith’s legal costs in the case

The ET ruled that Smith was a worker rather than a self-employed contractor due to the measures laid out in an employment agreement between Smith and Pimlico Plumbers. The employment agreement was first issued in 2005 and then updated in 2009.

Although Smith had some degree of flexibility over the hours he worked and was treated as self-employed for tax and VAT purposes, the 2005 and 2009 employment agreements required Smith to wear a uniform and drive a hired van carrying Pimlico Plumbers’ logo and work a five-day working week consisting of a minimum of 40 hours. Smith would also have to liaise with Pimlico Plumbers regarding any annual leave or time off.

Pimlico Plumbers appealed the ET’s ruling, and Smith cross-appealed to the Employment Appeal Tribunal (EAT). Both were dismissed.

The case was then taken to the Court of Appeal, which upheld the ET’s decision in February 2017. It found that Smith was a worker because he provided work personally for Pimlico Plumbers and was obliged to work a set number of hours on agreed days, and that there was a high degree of restriction on Smith’s ability to work in a competitive situation, suggesting that he was not in business on his own account.

Pimlico Plumbers was granted permission to appeal the Court of Appeal’s judgement in August 2017 to bring the case to the Supreme Court for review. The organisation does not expect a verdict to be issued until the end of 2018. Charlie Mullins OBE, chief executive officer at Pimlico Plumbers, said: “This case is not like Uber and the other ‘gig-economy’ cases. The engineers who are contracted to Pimlico Plumbers are very highly skilled individuals and can go anywhere and do whatever they want. They earn six-figures when they work with our customers, which is why they are so keen to do it. It is also true that engineers can choose when they want to work. They do not have to make themselves available to Pimlico Plumbers and can take time off whenever they want.

“As [an organisation], Pimlico Plumbers wants to comply with its obligations and it has always been our genuine belief that we have been doing that. [HM Revenue and Customs] has looked into the situation in the past and told us that engineers are self-employed. We have been operating in accordance with that.

“Employment law in the UK is very unclear, and hopefully we can all get some clarity from the Supreme Court on this situation, which will have huge implications for many industries, including plumbing and construction.

“The UK is going through a huge cultural change in how people work and how they are paid, and what we need more than anything else this week is a ruling that takes into account what is happening on the building sites, offices, press rooms and hospital wards of the 21st century, not one that harks back to the 1950s.”

Employment lawyer, Tom Street, founder of Tribunal Claim said: “The case’s outcome could be significant and a ruling against Pimlico would mean that the plumbers will be entitled to basic workers’ rights such as the national minimum wage and paid holiday. In addition, they could also bring discrimination claims. “

Pimlico Plumbers relied heavily on contract terms, which the courts found did not reflect the reality of work practices at the firm. The Supreme Court was scathing, saying the contract was “carefully choreographed.” The ruling said “on the one hand, Pimlico wanted to present their operatives to the public as part of its workforce, but on the other it wanted to render them self-employed.”

The judge’s exasperation from the bench was almost audible with these too-clever-by-half tactics, noting that Pimlico Plumbers “put before the tribunal an irrelevant contract, cast in highly confusing terms and now complains that the tribunal’s interpretation of them was highly confusing.” The ruling now offers some relief by possibly lowering the bar in recognising that some substitution can occur without compromising limb (b) worker designation, so long as personal service remains the “dominant feature” of the working relationship.

Our no win no fee Employment Law Solicitors can assist with all types of claims . Naturally, we pride ourselves on providing the best possible service to the highest standards, we offer free employment law advice on all problems. Call us on 020 3835 3940 or020 3835 3940