Last week, the Court of Appeal said that a ‘self-employed’ plumber who worked for Pimlico Plumbers (PP) was a worker. A worker sits between an employee and someone who is self-employed. They don’t have rights to protection from unfair dismissal as an employee does but they are entitled to paid holiday and the national minimum wage. Those who are genuinely self-employed don’t have any of these rights.
As with the decision of the Employment Tribunal in October 2016 that Uber drivers were workers, PP claimed that the plumber in this case (Gary Smith) was self-employed, and in business on his own account. The Court of Appeal disagreed, which gives Mr Smith rights to holiday and unpaid wages.
In reaching its decision, the Court of Appeal looked in detail at the agreement that Mr Smith had signed and PP’s manual, which contained terms and conditions governing his engagement. The manual included a requirement that Mr Smith works a minimum number of hours each week, wear the PP uniform and use a PP van. The manual also restricted Mr Smith’s ability to work for himself or other companies, and only allowed him to swap jobs with other PP plumbers.
In deciding whether someone is self-employed are not, there are three key factors – personal service, control and mutuality of obligation. In this case, the Court of Appeal decided that Mr Smith had to provide personal service. The language of the contract focused on Mr Smith personally and there was no right for Mr Smith to send someone else in his place to do his work (other than swapping individual jobs with other plumbers, which the Court of Appeal said was not a proper right of substitution). The Court also said that PP exercised tight control over Mr Smith as shown by the requirement to work a minimum number of hours and the restriction on him being able to work elsewhere.
This case is one of a number recently where those who were ‘self-employed’ have successfully challenged their employment status. As this issue becomes more a focus for the Government and HMRC, all businesses should review their contracts when it comes to engaging individuals on a self-employed basis and make sure that they are well-drafted. But remember that the contract is only part of the story and working practices (including how you promote your business and your workers to the outside world) are also a key factor.
If you want to engage individuals on a self-employed basis, they must be genuinely in business on their own account. This means that they don’t have to provide the services personally, or provide any services if they decide not to, and they must have control over what they do. If you want to control the provision of the services or have a particular individual to provide the services, they are likely not to be self-employed and the way that you engage them should reflect this.
Louise Paull – LawBite Employment LawBrief. For further legal advice, you can contact Louise via our online legal advice portal or you can contact one of our expert LawBriefs today for a FREE consultation on 020 7148 1066.