Written by Brabners LLP
The Court of Appeal has handed down its judgment in Pimlico Plumbers & Charlie Mullins v Gary Smith. Dismissing the appeal, the Court of Appeal upheld the Employment Appeal Tribunal’s decision that Mr Smith was a worker and not a self-employed contractor. The Court of Appeal considered the evidence and contractual documentation that Mr Smith worked under when at Pimlico Plumbers. It was noted that Mr Smith was VAT registered and paying tax on a self-employed basis but worked solely for Pimlico Plumbers for six years. After health issues in 2010, Mr Smith requested that his days of work be reduced from 5 days to 3 days. This request was refused and Mr Smith stopped working for the business. Mr Smith argued that he was entitled to workers’ rights which would include payment of the national minimum wage, paid holiday and the ability to bring discrimination claims. The Court of Appeal held that the Employment Tribunal was correct to find that Mr Smith undertook to provide his services personally, which in turn helped support that Mr Smith was a worker. The Court of Appeal gave a clear summary of the principles to be considered when considering the ‘personal service’ aspect of the employment status tests in its judgment. The Court of Appeal confirmed that:
- An unfettered right to substitute another person to do the work or perform the services is inconsistent with personal service.
- A conditional right to substitute another person may or may not be inconsistent with personal performance depending upon the conditionality. More specifically, it will depend on the precise contractual arrangements and, in particular, the nature and degree of any fetter on a right of substitution. This means the courts will look at the extent to which the right of substitution is limited or occasional.
- A right of substitution only when the contractor is unable to carry out the work will, subject to any exceptional facts, be consistent with personal performance.
- A right of substitution limited only by the need to show that the substitute is as qualified as the contractor to do the work, whether or not that entails a particular procedure, will, subject to any exceptional facts, be inconsistent with personal performance.
- A right to substitute only with the consent of another person who has an absolute and unqualified discretion to withhold consent will be consistent with personal performance.
This is the highest court to consider such a case and the ruling will no doubt be closely read by others with similar disputes. Whilst each case will depend on its own facts, the above case has provided some useful guidance regarding the personal service element of the employment status tests and how the right of substitution is likely to impact on this. Disclaimer: This bulletin is for general guidance purposes only and should not be used for any other purpose. This article is written by Brabners and reproduced with their permission. Brabners is a Limited Liability Partnership.