Pimlico Plumbers Ltd V Smith

The Supreme Court in Pimlico Plumbers Ltd v Smith [2018] UKSC 29 held that a heating engineer whose contract described him as self-employed was actually a 'worker' which entitled him to certain rights of an employee. In addition to the employment law implications of this ruling, it is important to consider the significance of the 'worker' category within a tax context.

Factual Background

The underlying dispute in this case arises from an unfair dismissal claim brought by Mr Smith against the company. The company argued (amongst other things) that Mr Smith was self-employed, and therefore was not eligible to make such a claim, on the basis that his contract stated that he was self-employed and that he paid tax and VAT using the rules and rates as they applied to self-employed persons.

The Court of Appeal ruled that Mr Smith was neither employed nor self-employed, but rather a worker. This decision was based largely upon the fact that he was obliged to perform work under his contract personally - he could not pass it on to a substitute. The Court of Appeal also found that he was contractually obliged to do a minimum number of hours work a week, indicating a level of commitment by Mr Smith to the company which was inconsistent with self-employed status. This decision and classification was upheld by the Supreme Court.

Tax Considerations

Even though Parliament has recognised the need for a category of employment between employed and self-employed as far back as 1875, for tax purposes, only the two categories remain.

Consequently, despite the number of different...