The Pimlico Plumber case has highlighted an area where many business owners are unsure of where they stand legally. The case concerned whether a sub contract plumber was self-employed, or legally classed as a “worker”.
Darren Sherborne, of Sherbornes Solicitors, is a leading lawyer specialising in employment law, and agreed to offer some insight into the case for county business.
“The importance of the difference between a self employed contractor and a 'worker' is that a worker is entitled to paid holiday, to earn the National living Wage, and to claim discrimination. A self employed contractor has none of those rights," said Mr Sherborne.
“There is wide spread confusion as to when someone is self employed. This is partly because the law can be vague, but also because accountants often advise a business about whether someone is self employed for tax purposes, but business’s don’t realise that this is a different question to whether someone is self employed for the purposes of employment law.
"The test is different. Indeed someone can be self employed for tax purposes, working for example on the Construction Industry Scheme (CIS) but still be a worker entitled to 4 weeks paid holiday per year.”
He added: “The case in question is Pimlico Plumbers v Gary Smith. Mr Smith was a plumber, doing work for Pimlico, and all agreed at the start he was self-employed. He paid his own tax, and received a higher rate of pay than those who were employed through PAYE.
"However, Mr Smith’s working arrangements were controlled tightly with numerous policies and procedures, and he was told where and when to work.”
The Court of Appeal has decided that Mr Smith was a worker, and could claim discrimination. (He was dismissed following a heart attack.) It follows that he can claim unpaid holidays too.
Mr Sherborne said: “The judgment rehearsed many aspects of the tests used by a court in deciding whether someone is self-employed, or a worker. Questions such as whether equipment was provided, or the main employer’s brand was used, or whether the employer controlled how work was to be performed.
“The most interesting element of the judgment looks at the right of substitution, or put another way, the need for the work to be done personally.
“That is to say, if a person can send someone else to do the work on any given day, then it points to a self-employed relationship. The court helpfully summarised the following ‘guiding principles’…
“It is important to note that this is only a guide, and each case will turn on its own facts, but it helps to see what the courts are thinking.
“Business owners need to look closely at their labour force rather than assume they are self employed. In many cases, the people doing the work will be workers for legal purposes and will be accruing holiday, even if the boss doesn’t realise it.”
Darren Sherborne is a partner at Sherbornes Solicitors Ltd , a Gloucestershire law firm specialising in business law.