Supreme Court rules on landmark Gig Economy case

The Supreme Court has delivered its ruling on the long-awaited Pimlico Plumbers case focusing on employment status and the gig economy.

This is the first time the UK’s highest court has made a decision on workers’ rights in light of the emergence of the gig economy.  Over the last couple of years, we have seen a string of decisions made by Employment Tribunals about whether an individual is a worker or self-employed. 

The difference is important. As a worker, they have the right to not be discriminated against on basis of age, disability, race, etc. A worker also has the right not to suffer any unlawful deductions from wage, rest breaks and the right to the National Minimum Wage/National Living Wage. If they are self-employed, they are not entitled to any real significant employment law rights and protections.

In this case, Mr Smith, a plumbing and heating engineer brought the case. He worked for Pimlico Plumbers for six years.

On the one hand, the Supreme Court took note that Mr Smith could decline a particular offer for work, could take outside work (as long as not from Pimlico clients) and Pimlico did not supervise the way in which Mr Smith did his work.

However, Mr Smith had to wear branded Pimlico uniform, drive its branded van. In addition, his contract did make references to ‘wages’, ‘gross misconduct’ and ‘dismissal’. On this basis, they agreed that the Employment Tribunal was entitled to conclude that Mr Smith was a worker.

The law on employment status remains nebulous

As legislation is so minimal, it has been up to the courts to interpret and develop tests to determine an individual’s employment status. They have considered factors, such as level of control, mutuality of obligations, personal service, integration, financial risks, equipment and remuneration.

This approach has led some to argue that the law is not clear enough. This is especially true as new forms of working have meant that the lines between worker and self-employed are blurred. In fact, the only conclusive way to determine an individual’s employment status is to go to an Employment Tribunal.  

The government-commissioned Taylor Review agreed with the criticism and put forward the following suggestions: 

  • The government should provide a clearer outline of what the employment status tests entail. The key principles should be laid down in primary legislation and supported with secondary legislation or guidance.
  • When developing the tests for the ‘dependent contractor’ status, more emphasis should be put on ‘control’ and less on the ‘requirement to work personally’.
  • The government should keep the distinction between employees, workers and self-employed. But it should rename the category of people who are eligible for worker’s rights but who are not employees as ‘dependent contractors’.

In response to the Taylor Review, the government decided to consult on how to make it easier to ascertain an individual’s employment status.

In particular, they asked what would be needed to achieve clarity and transparency on employment status, how a new statutory employment status could be structured and if alternative ways to legislation could help get more clarity. 

The consultation process ended on 1st June 2018 and now the government is now analysing the results.

Comment

Stuart Watkins, Professional Support Lawyer at Ellis Whittam, comments ‘The Supreme Court decision doesn’t really add anything to the current case law in this area. This is because they decided that the Tribunal was entitled to come to the decision they did about Mr Smith’s status. We will wait to see whether the government make any changes to employment status and the applicable tests following the recent consultations on the Taylor Report and the gig economy.’

Director of Legal Services

James Tamm

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