Employment lawyers have been keeping a close eye on this case as it has progressed through the various stages of appeal, and whilst the ruling does not represent a change in the law, its impact may nevertheless be felt across industries traditionally reliant on contractors. Contributors – Various.
Sarah Evans, employment law partner at JMW Solicitors, said: “Employment lawyers have been keeping a close eye on this case as it has progressed through the various stages of appeal, and whilst the ruling does not represent a change in the law, its impact may nevertheless be felt across industries traditionally reliant on contractors. It is unlikely to open the flood gates perhaps, because of the particular facts of the case and in particular the control exercised by Pimlico, but it does stress the importance of employers and workers recognising their true status – whatever that may be – and making sure that the contractual position of “independent worker” is reflected in the reality and practicalities of how the contract is performed. It may also mean that individuals who are in fact workers and not genuinely self-employed contractors are more likely to think about their position and indeed rights.”
Peter Finding, Partner at international law firm Taylor Vinters: “Developments in case law over the last few years have blurred boundaries between ‘employee’ and ‘worker,’ which has caused confusion and uncertainty. Today’s decision helps clarify certain issues – although it is not a business-friendly result. The Department for Business, Energy and Industrial Strategy is currently consulting on a re-calibration of these definitions, with a view to making them more relevant to the requirements of the future world of work and a flexible, innovation-driven economy – an important reform in the context of the current UK economy.
“Personal service is an important minimum criterion in assessing whether an individual should be treated as a worker. If an individual has, in reality, a genuine opportunity to send someone else to do the work, that is indicative of a more arms-length, commercial relationship – and should not allow the individual contracting party to afford themselves of ‘worker rights’ such as paid annual leave. However it is now clear that there are situations where a restricted right to send someone else to do work might still be consistent with personal service. For instance, where the right to substitute is only available: a) when the contractor is unable to carry out the work personally and b) with the consent of another person who has an absolute and unqualified discretion to withhold consent.”
Homa Wilson, employment partner at London solicitors Hodge Jones & Allen says: “Today’s decision is in keeping with earlier cases on worker status and offers hope to those who are engaged on short-term contracts that the law offers them some protection. Whilst the decision confirms that the courts will look beyond what the parties call themselves – courts have always looked beyond the label attached by the parties and examined the reality of the relationship. This is as it should be. As the reality in such situations is that individuals are in a weak bargaining position and often feel compelled to accept whatever terms are offered.
“Many had hoped that this decision would provide clarity on worker status. However, cases of worker status very much depend on the facts, and therefore will continue to be litigated as it’s not in the employer’s financial interest to concede without a fight. The decision is useful, it’s a judgment by the highest court in the UK, and it supports the tide of other worker status cases which show that the courts understand that such individuals need protecting. In light of this case companies are likely to review the terms they offer and tighten the contractual wording to ensure they are in a stronger position to challenge individuals who claim workers’ rights.”
Jonathan Rennie, partner at UK law firm TLT, comments: “The judgment highlights the “regrettable” complexity of this area of employment law but also, and perhaps more importantly, how easy it is for employers to take the wrong approach when trying to address their employment relationships. Firstly, the court issued a warning shot by reminding employers that they can’t expect to cover this issue off in the “careful choreography” of their contracts – the court will look at the reality of the situation and make its decision based on the facts of each case.
“In examining the reality, the court took a “checklist” approach, which provides employers with useful guidance as to the features of a working relationship that could be used to determine whether or not someone is a worker or self-employed. The court also helpfully clarified that when it comes to the degree of ‘personal service’ as a test for employment, Mr Smith was a worker and not self-employed even though he was allowed to substitute himself for someone else even if he wasn’t sick, for example.
“Secondly, the fact the Pimlico Plumbers lost its appeal and the risk that decisions against employers could apply to all workers immediately and automatically, should make employers more concerned about reviewing and updating their contracts and working relationships in light of modern working practices and employment law before it is too late. It is surprising that the Supreme Court didn’t offer any further commentary on this area of the law, given the number of high profile cases in the last year, the Taylor Report and its own acknowledgment of the complexity, which leads to more litigation. The variable nature of work means that it doesn’t fit neatly into the categories found in the various strands of legislation. As those ways of working continue to expand, pressure for clarity will continue to mount.
“If clarity was provided on employer or worker status from day one of starting work then all parties would know their immediate rights and responsibilities and unnecessary disputes would likely be avoided. The six plus years of litigation in this case was to decide a preliminary point only to enable the claimant to raise his main claims, which are yet to follow.”