The Supreme Court has ruled that a plumber classed as self-employed was in fact "a worker" in a landmark case for the gig economy.
Plumber Gary Smith won the legal battle for workers’ rights against Pimlico Plumbers, where he’d worked for six years. Despite being VAT-registered and paying self-employed tax, Smith was a worker, deemed the Supreme Court.
The ruling is expected to have huge ramifications for freelancers and so-called gig firms, such as Uber and Deliveroo.
Full employment rights
Giving Smith worker status means he would be entitled to full employment rights, such as holiday and sick pay.
The ruling means that an employment tribunal can now go ahead. It will examine Smith’s action against Pimlico Plumbers as a worker. This includes the claim that he was unfairly dismissed after requesting to work part-time following a heart attack.
Thousands of companies exposed
Pimlico Plumbers argued that Smith had freedoms such as the option to substitute someone else to carry out his work if he wished. Yet the Supreme Court said this wasn’t the case. The firm also required Smith to wear a company-branded uniform, lease one of its vans which displayed its logo and was equipped with a GPS tracker. And Smith had to work a minimum number of hours per week.
“This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get nasty surprise from a former contractor demanding more money, despite having been paid in full years ago,” Pimlico Plumbers chief executive Charlie Mullins said. “It can only lead to a tsunami of claims.”
What now for HMRC’s position on MOO?
The ruling also exposes HMRC’s misguided stance on employment status law, particularly its take on mutuality of obligation (MOO).
CEST, its online tool used for determining a workers’ employment status for tax purposes, doesn’t take MOO into account even though it is one of the central tenets of whether IR35 applies or not.
Unlikely to change other outcomes
This may be a landmark ruling. However, experts say it isn’t necessarily a game changer for other contractors looking to change their employment status.
“[The case] is a powerful precedent and the fact that the judgment comes from the Supreme Court means that it will weigh heavily when similar cases come to be heard,” Simon Gompertz, BBC personal finance correspondent, said. “However other cases, like those involving Uber and Deliveroo, are unlikely to be stopped in their tracks. Each firm has a different way of operating, different contracts and makes different demands on people working. Some allow you to get someone else to do the job instead, for instance, while others do not. That’s one of the key tests of employment status. So there’s a bit more clarity now, but expect the court challenges from gig workers to keep coming.”