Employment Status – Pimlico Plumbers in the Supreme Court.

The Supreme Court has finally delivered its decision in the important Pimlico Plumber’s case in a ruling which has far reaching consequences for workers considered to be self-employed in the so called “gig economy”.

The facts of the case are simple. Gary Smith was one of 380 tradesmen working for Pimlico Plumbers, a London-based domestic maintenance outfit providing a 24-hour property maintenance service. Mr Smith worked at Pimlico for 6 years and then suffered a heart attack. Mr. Smith asked to reduce his hours to help his recuperation but Pimlico refused and eventually repossessed his company-provided work van. In 2011, he filed a claim for unfair dismissal as an employee, discrimination on grounds of disability and for payment of sick pay and holiday pay.

The Employment Tribunal rejected Smith’s claim that he was an employee, but did hold that he should be considered a “worker”. A “worker” is considered self-employed but within another’s business rather than in their own concern as a self-employed contractor. Workers’ rights do not provide protection against unfair dismissal or generally the right to sick pay, but they do guarantee the minimum wage, protection against discrimination and holiday pay. Pimlico appealed but the decision was upheld through the Employment Appeals Tribunal and the Court of Appeal. Pimlico finally appealed the matter to the Supreme Court and they have also come down on the side of Mr Smith, confirming that he was a worker and as such has valuable (but limited) employment rights.

There are a number of factors that persuaded the Supreme Court and the lower courts and Tribunals to find in Mr Smith’s favour, but they can all be summed up under the issue of control. The fact that Pimlico exercised tight administrative control over Smith, imposed conditions around how much they paid him and on his clothing and appearance for work, and restricted his ability to carry out similar work for competitors if he moved on from the company, all supported the conclusion that he was a ‘worker’ and not genuinely self-employed. Furthermore, Mr Smith was under an obligation to do the work personally, rather than pass it on to a substitute contractor, even though he did have the option to pass work to another Pimlico worker. This was despite Mr Smith having been VAT-registered and paying self-employment taxes during his six years with Pimlico – these factors were “trumped” by the overriding fact of control.

The case has huge ramifications for the gig economy and could lead to claims for back dated holiday pay by workers in similar companies, such as City Sprint, Deliveroo and Uber. However, the law is still not clear cut. Although the principles enunciated in Pimlico will be applied in future cases, each case is fact sensitive and will be decided on its own facts. It will be important for employers to consider the reality of the relationship with self-employed contractors rather than relying on contractual labels. In the absence of government legislation, there are still no overarching principles to help guide employers through the maze of employment status. It is therefore yet to be seen whether or not the decision in Pimlico has changed the game.

If you have any queries please speak to your usual contact in the Employment and Pensions team.

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