Long Term Contractor Granted Employee Status – and all the trimmings!
The Supreme Court have today ruled in favour of Gary Smith, a long-term contractor for Pimlico Plumbers, by confirming his status as an employee under the Employment Rights Act 1996.
Despite losing their case at every stage, Pimlico took it to the Supreme Court, following a dismissal by the Court of Appeal last year.
These types of working arrangements are being increasingly tested in the courts and recent cases have shown the courts are not fooled by contracts which assert self-employed status but do not reflect the reality of the working relationship.
The case began when Mr Smith requested a reduction in his hours following a heart attack, which the firm refused. They took away his branded van, which he had hired from them and he claimed the end of his working arrangement in May 2011 constituted a dismissal.
The Company argued that Mr Smith had freedoms such as the option to substitute someone else to carry out his work if he wished, however it was the Supreme Court’s judgement that “The dominant feature of Mr Smith’s contract was that he must do the work himself”.
They also found that the company exercised “tight administrative control” over Mr Smith and we know that control is a key factor when determining employee status. This control took the form of them requiring Mr Smith to wear a company branded uniform and to lease one of their vans, displaying their logo and equipped with a GPS tracker. He was also required to work a minimum number of hours per week.
Pimlico Plumbers’s solicitor has said that Mr Smith had “enjoyed a 6-figure salary in some years” and took advantage of tax breaks such as writing off a room in his home as an expense and employing his wife as his secretary. Nevertheless, Mr Smith has won his case at every stage.
Whilst the Supreme Court Justices have made it clear that this judgment is very specific to the unique facts of the case, it is anticipated that this judgement may encourage other contractors to question their status, where it might suit them to have employee rights such as paid holiday, sickness or redundancy.
The moral of the story? Although someone may be described as self-employed, the label is irrelevant. After all, you can call you dog ‘cat’ but it remains a dog regardless.
Is your business at risk? At PlusHR, we advise our clients on all aspects of employment law, including guiding you complexities of hiring contractors. If you are confused by the term ‘mutuality of obligation’ or don’t understand the ‘control test’, let us help you to minimise the risks associated with using contractors and mitigate against claims such as the ones described above.