Workers’ rights in the gig economy

The “gig economy” has been dealt a second blow in the name of worker’s rights, after the Court of Appeal ruled in favour of a plumber at Pimlico Plumbers (PP).

Gary Smith was technically a self-employed contractor, who paid VAT and income tax on a self-employed basis, but worked solely for PP for six years. He hired a van bearing the company’s brand and was obliged under the agreement to work a minimum 40-hour, five-day week as well as various other contractual requirements. The company refused to let him switch to a three-day week after he had a heart attack.

Smith claimed he was entitled to worker’s rights. PP said Smith was hired on a self-employed basis, provided his own tools and was able to earn more (£80,000 in one year) as a result.

In Pimlico Plumbers v Smith [2017] EWCA Civ 51, the court upheld an earlier employment tribunal (ET) ruling that the plumbers were workers within the meaning of s 230(3)(b) of the Employment Rights Act 1996, although not employees. They were therefore entitled to basic rights such as paid holiday and the right to bring discrimination claims.

Delivering his judgment, Sir Terence Etherton said the employment tribunal had been right to reject PP’s submission that Smith had an unfettered right of substitution and to conclude “that the degree of control exercised by PP over Mr Smith… was also inconsistent with PP being a customer or client of a business run by Mr Smith. In particular, the ET was entitled and right to place weight on the onerous restrictive covenants… [which included] precluding Mr Smith from working as a plumber in any part of Greater London for three months after the termination of the [agreement]”.

Natalie Razeen, associate at Russell-Cooke, said: “This latest decision again suggests that courts are alive to the inequality of bargaining power faced by individuals in these circumstances. This serves as yet another reminder to employers that they should consider the question of employment or worker status carefully.”

The case comes hot on the heels of the Uber ruling in October 2016, in which an employment tribunal held that Uber drivers are “workers” not self-employed contractors.

In November, the government launched a review into workers’ rights in the “gig economy”, where Uber drivers, Deliveroo cyclists and other workers earn money on a casual basis.