Employment Status- recent case law

Pimlico Plumbers Ltd v Smith
The issue of who is an ‘employee’, who is a ‘worker’ and who falls into neither camp is clearly going to be one of the big issues of 2017. Headlines were made recently by the case of Pimlico Plumbers Ltd v Smith in which a plumber is claiming that he should be able to bring a range of employment law claims even though his contractual documentation stressed that he was self-employed.

Mr Smith was engaged by Pimlico Plumbers in 2005. Many of the features of his work were clearly inconsistent with being employed under a contract of employment. He was responsible for purchasing his own raw materials, for example, and was able to charge a ‘mark-up’ to the company when he used them in the course of his work. He also took full advantage of his self-employed tax status by setting off a considerable amount of his earnings as expenses, and was registered for VAT. It could not have been a surprise that the employment tribunal ruled that he was not an employee and could bring a claim for unfair dismissal.
However, the tribunal went on to find that he could bring claims under the Equality Act on the basis that he was disabled – and also claim holiday pay under the Working Time Regulations. To bring these claims Mr Smith did not need to show that he had a contract of employment, merely a contract which required him ‘personally’ to do work for Pimlico Plumbers and under which they could not be regarded as a client or customer of his own business undertaking.

In reaching the conclusion that Mr Smith did indeed meet this test (which made him a ‘worker’ under the Working Time Regulations and an ‘employee’ under the Equality Act) the tribunal found that there was an on-going obligation on Mr Smith to provide his services personally – indeed it was expected that he would do so on a full-time basis. He was not able to compete freely with Pimlico Plumbers by doing work for other firms or customers and that indicated that he was not ‘in business on his own account’.

On appeal to the Court of Appeal, Pimlico Plumbers argued that there was no real obligation on Mr Smith to do his work ‘personally’ and that he could have engaged someone else to do it on his behalf. The Court rejected this. The most that could be said was that Mr Smith could arrange for other operatives to cover his work if he had another job to go to. That fell far short of a ‘right of substitution’ that would indicate that there was no obligation on Mr Smith to provide personal service.

Pimlico Plumbers also argued that Mr Smith was actually engaged under a series of individual assignments rather than under one continuous contract under which he worked full-time. They argued that the tribunal had therefore been wrong to find that Mr Smith was not in business on his own account. The Court of Appeal rejected this line of argument as well. A number of fixed expenses were deducted from Mr Smith’s pay and so Mr Smith had to work a certain number of hours to make the work worthwhile for both parties. The tribunal had been entitled to find that there was a continuing obligation on Mr Smith to work for Pimlico Plumbers. The appeal was dismissed.

Capita Translation and Interpreting Ltd v Siacuinas

Soon after the Pimlico Plumbers case was decided, the EAT revisited the issue of ‘worker’ status in the case of Capita Translation and Interpreting Ltd v Siacuinas. This case concerns the status of interpreters who are engaged by Capita to provide their services to courts and tribunals in England and Wales. The interpreters are engaged on a freelance basis, but the issue is whether they can nevertheless be said to be ‘in employment’ for the purposes of the Equality Act – a test, as we have seen, equivalent to whether they have ‘worker’ status for rights such as holiday pay and the minimum wage.

Mr Siacuinas is the fourth translator to bring a claim against Capita Translation and Interpreting Ltd. He was not put off by the fact that the previous three claims had been unsuccessful. At first that seemed to be a wise move because the tribunal (which was not bound by previous tribunal decisions) found that he was indeed ‘in employment’. That conclusion was based on the way in which he was required to work to Capita’s standards on each individual assignment. The tribunal deliberately took no account of Capita’s claim that there was no contractual obligation on them to offer him assignments and no corresponding obligation on him to accept any that might be offered. As a result, Capita argued there was no on-going contractual obligation on Mr Siacuinas to work for Capita. The tribunal thought that this was irrelevant because the discrimination claim was based on allegations about how Mr Siacuinas was treated when he was on an assignment. It was not concerned with what happened in the gap between individual assignments

The EAT held that this was an error. Shortly after the tribunal’s decision, the Court of Appeal had made it clear in Windle& others v Secretary of State for Justice that the issue of ‘mutuality of obligation’ was a relevant consideration which might ‘shed light on’ the nature of the relationship during each individual assignment. The case was remitted to a fresh tribunal to reconsider the nature of the relationship, taking into account the position that the parties were in when no assignment was being undertaken.