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Employment Law case: Court of Appeal decides a self-employed person in fact has ‘worker’ status.

Written by By Mark Reed on 21 February 2017

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It has been a much-debated issue as to what constitutes an employee, a worker, or those that are self-employed because of the difference in employment rights that each one carries. Well, the following case answers some questions for those who query their status of employment, and acts as a binding authority to lower courts because of its indictment up to the Court of Appeal.

Pimlico Plumbers Ltd v Smith (Gary) [2017] EWCA Civ 51

Facts

Mr Smith worked for Pimlico Plumbers Ltd (PPL hereafter) as a self-employed operative for over 6 years, with an understanding from both parties that he was an independent contractor who owned his own business and used his own tools, but with a specific arrangement with PPL. This arrangement was that Smith would wear a PPL uniform, drive a PPL van, and any customer estimates done, would be in the name of Pimlico.

However, Smith was paid by way of receipt of invoice, and taxed accordingly as a self-employed person (deducted 20% at source). Interestingly, there wasn’t any obligation for Smith to accept work offered, or PPL to even offer any work, as per the contract terms, but there were expected minimum hours for Smith to work each week.

The reason for claim was due to a tragic heart attack that left Smith without a job, after he was ‘unfairly dismissed’. When Smith investigated his apparent rights, he then bought a claim for direct disability discrimination, discrimination by reason of failure to make reasonable adjustments, and also put forward allegations in respect of holiday pay and unauthorised deductions from wages.

Held

It was held that Mr Smith was in fact a ‘worker’ rather than a traditional self-employed contractor. The key issues that were addressed were that he was expected to work a certain number of hours each week, even though it was ostensibly purported that he could come and go as he pleased. Most importantly though, it was the amount of control that PPL exercised over Smith which showed that they were clearly not a client of Smith. In fact, he was an integral part of the efficient running of PPL, although deemed subordinate to it. As a whole, it was found that Mr Smith had too many ‘contractual obligations’ for the purposes of dismissing his status as being a traditional self-employed contractor. Equally, PPL didn’t have absolute control, that would suggest he was an employee, hence the middle ground of having a ‘worker’ status. This means that Smith will be able to now pursue his claims for unlawful deductions and holiday pay and more importantly his claim for disability discrimination. It must be noted, however, that his initial claim for unfair dismissal cannot be pursued because this is a claim for those who are contracted as ‘employees’.

Conclusion

A lot of business’s can use this case to understand that just because some people have a classification of ‘self-employed’ for tax purposes, it does not mean it invalidates them from any employment rights.
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