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March 1, 2017

Pimlico Plumbers Ltd and anor v Smith

In Pimlico Plumbers Ltd and anor v Smith, the Court of Appeal upheld an Employment Tribunal's decision that a plumber who was self-employed for tax purposes was nevertheless a 'worker' and an 'employee' for employment law purposes.
Smith was a plumber who signed an agreement that his work would be governed by terms and conditions set out in Pimlico Plumbers Ltd's (Pimlico) manual. This included provisions regarding working hours, uniform and appearance; restricted the ability to work for himself or other companies; obligation to use a Pimlico's van for his work; and provided he could only swap jobs with other Pimlico operatives. During this period, Smith filed tax returns on the basis that he was self-employed. He was registered for VAT and submitted regular VAT invoices to Pimlico.
Smith had a heart attack and Pimlico subsequently terminated its arrangement with him, following which he brought claims alleging unfair dismissal, wrongful dismissal, entitlement to pay during the period of a medical suspension and failure to provide particulars of employment. These depended on whether Smith was an employee for the purposes of the Employment Rights Act 1996. Additionally, he made claims for unpaid holiday pay and unlawful deductions from wages, requiring him to be a 'worker'. Smith also claimed against both Pimlico and its owner, for direct disability discrimination. In order to succeed with this claim, he needed to demonstrate that he was an employee.
The Court of Appeal observed that 'the case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker'. The degree of control exercised by Pimlico over Smith was inconsistent with Pimlico being a customer or client of a business run by Smith. In particular, the judge placed weight on the onerous restrictive covenants in the agreement, precluding Smith from working as a plumber in any part of Greater London for three months after termination. Such restrictions were not consistent with self-employed status.
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