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Judgment in Gig Economy Case

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Judgment in Gig Economy Case

Judgment in Gig Economy Case

The Supreme Court has handed down its judgment in another high profile gig economy case.

The Supreme Court has ruled that an employment tribunal (“ET”) was entitled to find a contractor, although contractually described as an independent contractor, was an employee for the purposes of the Equality Act 2010 and a worker as defined in s230(3)(b) Employment Rights Act 1996 (the “ERA 1996”) and under the Working Time Regulations 1998.

Gary Smith (“Mr Smith”), a plumbing and heating engineer worked for Pimlico Plumbers Ltd ("Pimlico"), a London-based plumbing business. After terminating his contract, Mr Smith brought claims against Pimlico in an ET. Mr Smith claimed unpaid holiday pay, unlawful deductions from wages and disability discrimination when Pimlico terminated his contract. The ET was required to determine whether Mr Smith was an independent contractor, worker or employee for the purposes of his claim.

Under his contract with Pimlico, Mr Smith was under no obligation to accept work and Pimlico was under no obligation to offer it. Additionally, there was no right of substitution, although another Pimlico operative contracted with Pimlico could carry out Mr Smith’s duties. Mr Smith was also required to wear uniform and carry a Pimlico ID card. Mr Smith was self-employed for tax purposes and VAT registered. Mr Smith was, however, required to wear Pimlico branded items, drive a branded van and hold a Pimlico identity card.

It was necessary for Mr Smith to show that Pimlico was not a client or customer of his to be successful in his claims. The Supreme Court found that the ET was entitled to conclude that Pimlico could not be regarded as a client or customer of Mr Smith because Pimlico held a significant amount of control over Mr Smith's operations. This was indicated by branded uniform and control over his administrative duties. Mr Smith appeared to be subordinate to Pimlico.

The Supreme Court found that the ET was entitled to conclude Mr Smith was a worker under the ERA 1996.

The decision of the Supreme Court is synonymous with decisions in other high profile gig economy cases:

  • May 2018 - Addison Lee cycle Courier is held to be a worker

  • November 2017 - Two Uber drivers are classed as workers and not small businesses engaging with a technology platform

  • September 2017 - Three Addison Lee drivers are classed as workers and not self-employed

  • January 2017 - A CitySprint cyclist regarded as a self-employed freelancer is classed as a worker.

The trend in the gig economy cases bucked slightly in November 2017 when the Central Arbitration Committee decided that Deliveroo cyclists were self-employed because they could nominate other riders to complete deliveries.

The gig economy cases highlight how businesses should consider carefully how they engage with individuals. Clearly, it is not the form of the relationship which is assessed, but the substance in order to determine employment status. The Government recognises the importance of determining employment status and in 2016 commissioned Matthew Taylor to conduct a report into employment practices in the modern economy. The findings were published in July 2017 and it was recommended that the Government replaces their “minimalistic” approach to legislation with a clearer outline of the tests for employment status. Additionally, it was recommended that the Government retain the current three-tier approach to employment status as it remains, but rename it as “dependent contractors” for the category of people who are eligible for worker rights. The recommendations have not been actioned as of yet and it may be sometime before they are, with Brexit the key priority for the Department of Business Innovation and Skill for the time being.

If you would like further information on this case, please contact Millie Kempley and Jemima Clarke (Trainee), or you can give us a call on 0345 070 6000.