Pimlico Plumbers loses employment rights case in landmark legal battle

Pimlico Plumbers vans

The contractor took the case to an appeal tribunal and the Court of Appeal where his case was unsuccessful.

Mr Smith said he would now be celebrating his victory with a drink.

Smith signed an agreement to provide plumbing work on behalf of Pimlico in August 2005.

The Supreme Court unanimously dismisses the appeal.

Gary Smith had been a VAT-registered and self-employed taxpayer, but it was ruled that he was entitled to basic workers rights.

Charlie Mullins, OBE, CEO and founder of Pimlico Plumbers has warned that United Kingdom companies using self-employed contractors face a "tsunami of claims" after his company lost the appeal.

ReactionPimlico Plumbers chief executive Charlie Mullins leaves the UK Supreme Court.

In a unanimous judgment, the Supreme Court found that Gary Smith was a worker as defined by the 1996 Employment Rights Act (ERA), entitled to bring a claim against Pimlico Plumbers (Pimlico) for unlawful deduction from wages; and a worker as defined by the 1998 Working Time Regulations (WTR), entitled to a period of paid annual leave.

"Gary Smith knew he was a subcontractor and he had been very happy for six years and all of a sudden due to his illness he wanted to claim workers' rights - basically wanted to have his cake and eat it". It was therefore not necessary to consider what impact a finding that there was no umbrella contract (and therefore that the contractual obligations subsisted only during the actual assignments) would have had on the 'limb (b)' analysis. In this case the terms of the contract (which referred to "your skills" etc.) are clearly directed to performance by Mr Smith personally, and any right to substitute was significantly limited by the fact that the substitute had to come from the ranks of those bound to Pimlico in similar terms. He also bore some of the financial risk of the work and the manner in which he undertook it was not supervised by Pimlico. In February 2017, the Court of Appeal found that Smith was a worker because he was required to use the Pimlico branded van for work and cover a minimum number of hours a week.

However, there were also features of the contract which strongly militated against recognition of Pimlico as a client or customer of Smith. Smith was party to certain freedoms, such as accepting outside work, but the organisation held tight control over administrative aspects of his work, his attire, pay, and his working activities following termination.

Mullins responded: "The shame of all this is that it is generally accepted that current employment law is not fit for objective, and needs to be changed. But when it's put to the test in our highest court there isn't even the slightest suggestion that there is a problem that needs to be addressed". "The decision is an important one as on the one hand there is the need to protect the rights of those who work in the gig economy, whilst preserving the ethos of such a business model; with flexibility being at the heart of it".

Whilst the decision confirms that the courts will look beyond what the parties call themselves - courts have always looked beyond the label attached by the parties and examined the reality of the relationship.

The decision led some to interpret that the way was now clear for other self-employed freelance staff to claim the same.

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