Employment status is currently a pertinent issue given the business models arising from the ‘gig’ economy, i.e. Uber drivers and the resulting precarious working conditions.  Under UK employment law there are three main employment statuses – employee, worker, and contractor.  Which category one falls into and the degree of statutory protection depends on whether 1) the person is required to provide the service personally; 2) the obligation on the employer to provide work and the employee to accept the work; and 3) the degree of control the employer has on the person to dictate the terms of how, when, and where the work is to be carried out.  If all three factors are present then the person will be considered an employee.  Where not all three factors are present the person may still be considered a worker and may be entitled to some employment rights.  Where none of the factors are present the person is considered a contractor.  Employees have the greatest degree of protection under UK employment law and contractors have the least degree of protection.

Pimlico Plumbers Ltd and another v Smith  [2017] EWCA Civ 51

In this case the court of appeal considered whether a plumber engaged by Pimlico Plumbers Ltd (Pimlico) was a worker or a contractor as this would determine his rights under the Employment Rights Act 1996, the Working Time Regulations 1998 and the Equality Act 2010.

 Mr. Smith carried out plumbing work for Pimlico between August 2005 and April 2011.  He claimed that following a heart attack in January 2011 he was unfairly dismissed and that his dismissal constituted discrimination on the grounds of disability.  In 2005 Mr. Smith had signed an agreement with Pimlico which stated that he was a self-employed contractor.  However, the agreement also stated that the terms of his agreement for work are detailed in the ‘Company Procedure and Working Practice Manual’ which he must read and agree to comply with before signing the agreement.  The manual stipulated that he was required to work a minimum of 40 hours per week; wear The Company logo’ed uniform at all times; and must always be available during his shift to take on call work.

The Court of Appeal held that the Employment Tribunal was right to conclude that Mr. Smith cannot be a contractor, as Pimlico Plumbers Ltd. could not be considered a customer or client of Mr. Smith’s buisiness given the degree of control exercised by Pimlico Plumbers Ltd over Mr. Smith.  It held that the Employment Tribunal made no error in law or principle in reaching the conclusion that Mr. Smith is a ‘worker’ as he was an integral part of Pimplico Plumbers’ operations and subordinate to Pimplico Plumbers Ltd.

The Master of Rolls, Sir Terence Etherton highlighted at paragraph 3 of the Approved Judgment:

“The 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, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker.”