Author: Jane Wheeler
The Court of Appeal has delivered its judgment in Pimlico Plumbers Limited -v- Gary Smith. This was another case looking at whether an individual was self-employed or a “worker”.
Gary Smith was a plumber with Pimlico Plumbers. He claimed that he had been unfairly and wrongfully dismissed. His contract terms provided that he was a “self-employed operative”. He had significant flexibility in the way he carried out his job: he was permitted to subcontract if he wished to; he had flexibility about when and how a job was done; and in theory could carry out other work, outside of what he did for Pimlico Plumbers, if he wished to. He supplied his own tools and equipment and took out his own insurance.
That said, he had to wear the Pimlico Plumbers’ uniform and comply with the company’s rules and policies. His contract also contained a non-compete which in practice prevented him from working as a plumber in the Greater London area for 3 months after his contract with Pimlico Plumbers ended.
The Court of Appeal followed the earlier decisions of the employment tribunal and the EAT and held that Mr Smith was a “worker”.
Some key areas that, in our view, are significant are:
- the court found that there was a requirement for Mr Smith to provide services personally. This is one of the key elements to establish whether someone is a worker as opposed to self-employed. The court looked at the contract which referred to “you” throughout which showed that Mr Smith was expected to carry out the work personally. The court also commented that it is only really where there is an unfettered right to get someone else to do the work in your place that the arrangement is more likely to be one of self-employment.
- The court was also critical of the restrictive covenants in Mr Smith’s contract as the effect of the non-compete was to provide that he could not work as a plumber within Greater London. This was a factor in the court determining that Mr Smith was a worker.
- Some creative arguments were put to the court about the usual working week. There was a manual which set out the expectation that the plumbers would work for 40 hours a week. One of the (10 or so) arguments put forward by Counsel for Pimlico Plumbers was that the manual was not incorporated into the contract. The court took the practical approach in saying that the expectation of the 40 hour week was clearly set out in the contractual documentation.
So, in summary:
- Consider whether it is appropriate to include restrictive covenants in the contracts for self-employed individuals.
- Look at all documents in the round. Do they reflect the practical reality? If, as a business, you wish to preserve the self-employed status of individuals, consider carefully any factors which point away from that (e.g. the expectation of doing a 40 hour working week).