The End of The Gig Economy?
Gary Smith worked solely for the London-based company from August 2005 until April 2011. After suffering a heart attack, Smith asked for his working hours to be cut from five days a week to three. Pimlico declined his request and took away his company-branded van. Pimlico maintained that their plumber was self-employed.
Despite being VAT-registered and paying self-employed tax, he was entitled to workers’ rights, the court ruled.
The ruling will be closely read by others with similar disputes, many of whom work for firms in the so-called gig economy.
In April 2012, an employment tribunal decided that, although Smith was not an employee, he was a worker.
Pimlico appealed to both the Employment Appeal Tribunal and the Court of Appeal. Both appeals were dismissed. Lord Wilson’s Supreme Court judgment, with which Lady Hale, Lord Hughes, Lady Black and Lord Lloyd-Jones agreed, noted that, although Smith could nominate another plumber to take on a job for him, this power of substitution was limited in scope as it had to be a plumber under contract with Pimlico.
In handing down the judgment, Wilson also said Pimlico had a large degree of control over Smith’s “appearance and the cleanliness of his uniform” and his ability to compete with the company when he ceased to carry out his duties. In other words, it doesn’t matter what the written contract says but what is the reality on the ground.
- As a worker, Mr Smith or any other worker is entitled to a contract or other arrangement to do work or services personally for a reward (the contract doesn’t have to be written)
- their reward is for money or a benefit in kind, for example, the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
Workers are entitled to certain employment rights, including:
- getting the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to not work more than 48 hours on average per week or to opt out of this right if they choose
- protection against unlawful discrimination
- protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
- to not be treated less favourably if they work part-time
Workers usually aren’t entitled to:
- minimum notice periods if their employment will be ending, for example, if an employer is dismissing them
- protection against unfair dismissal
- the right to request flexible working
- time off for emergencies
- Statutory Redundancy Pay
The big issue for employers is that more ’subcontractors’ will now look at their status and if they can be defined as workers they will be entitled to put in claims for previously unpaid holiday pay.
The government will not help to resolve this at present because their time is taken up by Brexit.
The Uber case will shortly come before the same court I suspect with the same result.
You should review all arrangements you have with subcontractors to ensure they are genuine both in the contract and on the ground.