Plumber’s court win will shake up gig economy

THE WAY companies use workers in the so-called gig economy could dramatically change after the Court of Appeal ruled against Pimlico Plumbers in a landmark case.

The court found that Pimlico Plumbers’ contractors in fact qualify as workers, meaning they are entitled to employment rights such as sick pay, minimum wage and paid holiday.

Gary Smith, who used to work for the London plumbing company as a self-employed contractor, brought the case after they rejected a request from him to work fewer hours following a heart attack. He said his status was more akin to an employee than a contractor and that he should have received benefits such as sick pay.

The case could have ramifications across the gig economy. Drivers and couriers working for companies such as Uber and Deliveroo do so as self-employed contractors and Uber is currently appealing a tribunal ruling that said its drivers are entitled to basic employment rights.

“This is a significant ruling for the workers at Pimlico but it will also concern those companies operating in the gig economy,” said Glenn Hayes, employment lawyer at Irwin Mitchell. “The outcome of this case is very significant and could make it more difficult for Uber and others to persuade the courts that its drivers are genuinely self-employed.”

The Court of Appeal ruled yesterday that because Mr Smith worked a minimum of 40 hours a week, had to wear a uniform, and drove Pimlico Plumber’s vehicles he was a worker.

He worked for the one company for six years.

Charlie Mullins, the chief executive of Pimlico Plumbers, said: “We will be looking at the full judgment and there is a good chance we will appeal to the Supreme Court.”

Mr Mullins contended that his firm’s plumbers are self-employed, provide their own tools and forego employee benefits for higher salaries. He said Mr Smith was paid £80,000 a year.

The rise of self-employed workers in recent years prompted the Prime Minister, Theresa May, to commission an independent review into modern working practices last autumn, headed by Matthew Taylor, chief executive of the Royal Society of Arts.

There’s a lot to be said for being one’s own boss. No one to nag you all the time, no annoying office gossip, cherry-picking the jobs you want. The biggest benefit of all to being self-employed is perhaps the freedom to decide when to work and when to go on holiday.

That kind of flexibility, and indeed job variety, is hugely appealing. Add to that the advent of high-speed internet and smartphones, which have made it possible to work remotely and easier to manage boring tasks like book-keeping, and anyone can see why there has been a surge in the number self-employed in this country.

This phenomenon has also been helpful for companies who want to take on people as and when they need them, and don’t want to bother with the administration of employee benefits such as pensions and parental leave.

The trouble is, employment law, and Her Majesty’s Revenue and Customs for that matter, have not kept pace with the changing times. The difference between the self-employed and the full-time employee is a grey area that needs to be firmly demarcated in black and white as soon as possible – for the benefit of both companies and their workers.

Unfortunately, the courts have missed an opportunity to do so. The ruling yesterday against Pimlico Plumbers, and one against Uber last year, have done nothing to offer any clarity. In fact, the judgments have muddied the waters even more by introducing the rather odd status of “worker” to the mix. Does anyone really know what this word means? For all the sympathy one feels for Gary Smith, the plumber who brought the claim against Pimlico after being told that he would not be able to reduce his working days after suffering a heart attack, it’s hard to believe that he was under the impression that he was a full-time member of staff at the company.

After all, Mr Smith was VAT-registered, he paid tax on a self-employed basis and used his own materials on the job. He had been doing this for six years and was possibly paid more because of it. He would have been free, without penalty, to accept or reject any offer of employment made to him by Pimlico or any other person for that matter – a right not afforded to full-time staff. Looking for work elsewhere wouldn’t have been hard – good plumbers in London are like gold dust. He would also have enjoyed the substantial tax benefits of being self-employed, of which there are many.

Mr Smith’s claim that he was a “worker” and therefore entitled to the national minimum wage, sick pay and paid holiday and all the other wonderful benefits that come with signing on the dotted line of an employment contract, is, therefore, a bit rich. If the situation was so miserable, why didn’t he approach the company years before? Don’t like the set-up? Just leave – that’s the beauty of being self-employed.

His claim, and the court’s ruling on it, are somewhat naive and smack of wanting to have one’s cake and eat it.

Sure, there’ll be unscrupulous companies that take advantage of the rules. But if businesses treat workers badly, people will vote with their feet.

This aside, the other pressing question here is why on earth HMRC allowed Mr Smith to work for Pimlico Plumbers for six years, and by all accounts full-time, without questioning his employment status. In general, HMRC requires the selfemployed to work for a number of different employers in any given year – or forfeit their right to the status.

Yesterday’s reckless ruling now opens the door for the taxman to look back at thousands of companies and attempt to claw back national insurance and other taxes they might have been liable to pay on self-employed staff now deemed “workers” in the eyes of the law.

This halfway house ruling has made a pig’s ear of employment law. Rather than bringing clear guidance, it has done the opposite. This will stifle Britain’s private sector. It will curtail innovation and make life harder for small companies trying to grow bigger. Fearful of being dragged to the courts, many employers, large and small, will now think twice about using selfemployed people.

The biggest losers here are the country’s businesses, the biggest winners – as usual – the lawyers.

‘If businesses treat workers badly, people will vote with their feet’