12 Jul 2018
The recent case of Gary Smith v Pimlico Plumbers has been a significant case in relation to those engaging workers in what is known as the Gig Economy. The case was focused on workers’ rights and whether Gary Smith, who was contracted on a self-employed basis, VAT registered and paid tax as a self-employed individual, was nonetheless classed as a worker and entitled to rights such as sick pay.
What does current legislation say?Under the current legislation, section 230 (3) of the Employment Rights Act 1996 defines a worker as an individual who has entered into or works under a contract of employment or any other contract, whether express or implied, oral or in writing, whereby the individual undertakes to perform personally any work or services for another party to the contract. In determining whether a relationship meets the criteria, Tribunals take into consideration the Multiple test when determining status. The factors that they consider, amongst others include:
- Degree of control by the employer
- Obligation of the employer to provide work
- Whether the individual is obliged to provide service personally
- Provision of tools and equipment
- Mutuality of obligation
- Integration within the business
Why was Gary Smith found to be a worker and not self-employed?Mr Smith had been solely working for Pimlico Plumbers for approximately five and a half years. The arrangement was terminated by Pimlico Plumbers four months after suffering a heart attack. He subsequently claimed for unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay, disability discrimination and unlawful deductions from wages. An agreement made between the parties in 2009 stated that Mr Smith:
- Was under no obligation to accept work from Pimlico Plumbers
- Was an independent contractor of Pimlico Plumbers
- Had to provide his own materials
- Had to drive a Pimlico Plumbers branded van with uniform and carry a Pimlico Plumber identity card
- Was subject to restrictive covenants
Is this a unique case?No, this case follows the decision from October 2016 where Uber drivers in the UK won the right to be classed as workers rather than independent contractors, and therefore entitled to workers’ rights such as sick pay and national minimum wage. In the “Gig Economy,” instead of being paid a salary or an hourly rate, workers get paid for the ‘gigs’ they do such as a taxi journey or a food delivery. This gives workers more flexibility to work when they want however it also means on occasions they could be paid below the national minimum wage amount for the work they undertake, especially when factoring in their expenses. This benefits “employers” as they do not incur extra costs when work is not available, they only pay when the work is available and being undertaken. Generally, workers in the Gig Economy enter into contracts on the basis of independent contractors and as such are not entitled to workers’ rights. The Uber case and now the Pimlico Plumbers case show the direction in which Employment Law has been applied in the area of the Gig Economy. According to figures from the BBC, from 2010 to 2016, London’s gig economy grew by 72% with the introduction of firms such as Uber and Deliveroo. Customers have access to these services from their mobile phone which has then in return increased demand for workers.
How will this impact the Gig Economy?It has been reported that as the Pimlico Plumber case is a Supreme Court decision it will likely be seen as a precedent for future cases involving worker status. Recent decisions may affect the Gig economy as similar companies may start to change their business models or pass the increased costs onto customers as companies will incur a greater expense if those working for them are no longer deemed independent contractors but workers, entitling them to national minimum age and other workers’ rights.
Expert SupportFor support with the employment status of your workers, Gig Economy issues, or tribunal support, speak to a Croner expert on 0808 145 3378
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