The latest in a series of cases on the "gig economy" has once again highlighted the importance of examining the reality of an individual’s working arrangements.

The latest in a series of cases on the “gig economy” has once again highlighted the importance of examining the reality of an individual’s working arrangements.

In the case of Pimlico Plumbers & Charlie Mullins v Gary Smith, the Court of Appeal grappled with the question of a plumber’s employment status.

Gary Smith worked as a plumber for Pimlico Plumbers. He was VAT registered, taxed on a self-employed basis and provided his own materials. However, he was also required to be available to work for 40 hours per week, to comply with the company’s detailed rule book, to drive a van bearing the company’s logo which he had to hire from the company, to use a company-issue mobile phone and to wear a company-branded uniform. The company considered him to be self-employed.

Mr Smith had a heart attack in 2010 and asked the company if he could reduce his working time from five days to three days. The company refused, took away his branded van and terminated his contract. He brought a number of claims including unfair dismissal, wrongful dismissal, holiday pay and disability discrimination. The Employment Tribunal decided that he was not an employee and therefore could not claim unfair dismissal. However, it decided that he was a “worker” rather than a self-employed individual. Crucially, this meant that he was entitled to a number of rights including holiday pay and disability discrimination. Both the Employment Appeal Tribunal and the Court of Appeal agreed with this decision.

One of the major factors in leading the Court of Appeal to this conclusion was the fact that Mr Smith was required to give personal service to the company. In other words, he did not have the flexibility to send another plumber of his own choice to fill in for him if he was ill, on holiday, or otherwise unable to attend a particular assignment. Under the terms of the contract, Mr Smith could ask another plumber engaged by the company to carry out the assignment. Alternatively, he could substitute an external contractor to do the work – but only with the approval of the company. The court took the view that this was not an “unfettered” right of substitution and so was not sufficient to indicate that personal service was not required. Mr Smith’s working arrangements therefore fell within the definition of a worker because he was undertaking to personally perform work for the company, in circumstances in which the company was not his client or customer.

What lessons can we learn from the case of Mr Smith and other similar cases, such as the case brought by two Uber taxi drivers and the claim by a City Sprint courier that she was entitled to holiday pay? In all of these cases, the factual background was extremely important. The various contracts, rule books and working arrangements were considered in detail. The courts were not prepared to accept at face value the labels given to the arrangements in the, often convoluted, documentation drafted by the companies’ lawyers. The message is clear: however cleverly an employer dresses up a relationship to make it look as though individuals are self-employed, ultimately the way in which the contract works “on the ground” will determine the question.

If a “self employed” individual is held to be a worker, then that person will be entitled to a raft of rights including the right to be paid the national minimum wage, the right to holiday pay and the right not to be discriminated against.

If you would like to discuss any issues raised in this article, we have specific employment law expertise in advising in this area. For further advice, please contact Louise Connacher.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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