Employment Essentials: February 2017 Top 5

Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

At number 1: Plumber self-employed for tax purposes a 'worker' for employment law purposes

On 10 February, we received the latest development in the 'employment status' debate. In Pimlico Plumbers Ltd and anor v Smith, the Court of Appeal has upheld the decision of an employment tribunal that a plumber who was self-employed for tax purposes was nevertheless a 'worker' under the Employment Rights Act 1996 and the Working Time Regulations 1998 (claims for unpaid holiday pay and unlawful deduction of wages) and an 'employee' under the extended definition of the Equality Act 2010 (claim for disability discrimination).

The Court of Appeal held the employment tribunal had been correct to conclude that Mr Smith was under an obligation to provide his services personally as there was no express or implied right of substitution or delegation. Also, Pimlico could not be considered to be a client or customer of Mr Smith's business but was better regarded as a principal. Mr Smith was an integral part of Pimlico's operations and subordinate to Pimlico.

This judgment builds on the judgment of the Supreme Court in Clyde and Co LLP and anor v Bates van Winklehof [2014] in that a distinction is to be drawn between:

persons employed under a contract of service (employees); persons who are self-employed, carrying on a profession or a business undertaking on their own account, and who enter into contracts with clients or customers to provide work or services for them (self-employed contractor); and persons who are self-employed but provide their services as part of a profession or business undertaking carried on by someone else (workers). Integration in the business appears to be a factor of increasing importance in the current wave of worker status cases. Mr Mullins (the owner of Pimlico) criticised Mr Smith for wanting to have his cake and eat it - to take the tax benefits of self-employment but also want the protection of employment law. Setting to one side the general misunderstanding by employers that employment status for tax purposes (with 2 options: employee or self-employed) equates to employment status for employment law purposes (with 3 options: employee, worker or self-employed), Pimilico could equally be accused of wanting to have its cake and eat it. Pimlico operates a business model under which operatives are intended to appear to clients of the business as part of the...