Pimlico Plumbers v Smith: A Chance down the Drain?

19 June 2018

Hopes were high that the Supreme Court’s judgment in Pimlico Plumbers would provide definitive guidance for practitioners advising clients who are involved in the gig economy. However, whilst the case undoubtedly provides some helpful instruction, the court resisted the opportunity to fully explore and provide definitive guidance as to the approach to take in this area.

The case arose out of a claim in the employment tribunal brought by Mr Smith against Pimlico Plumbers. In order to proceed with various elements of his case, Mr Smith needed to show:
(a) that he had been an “employee” of Pimlico under a contract of service within the meaning of section 230(1) of the Employment Rights Act 1996
(b) that he had been a “worker” for Pimlico within the meaning of section 230(3) of the 1996 Act;
(c) that he had been a “worker” for Pimlico within the meaning of regulation 2(1) of the Working Time Regulations 1998; and/or
(d) that he had been in Pimlico’s “employment” within the meaning of section 83(2)(a) of the Equality Act 2010.

The tribunal at first instance found that, whilst Mr Smith was not an employee under a contract of service, he nevertheless was a worker in respect of (b) and (c) above, and was in employment in respect of (d) above. It was the tribunal’s conclusion in respect of the latter three issues which were challenged before the Supreme Court, after Pimlico’s appeal was dismissed by the Employment Appeal Tribunal and the Court of Appeal. Lord Wilson gave the leading judgment, with which the remaining justices agreed.

Confusing Terminology

A theme running through the judgment was criticism of the unfortunate situation whereby, in the same area of law, the same word is interpreted differently within different contexts, and different words are given the same meaning in different contexts [7]. His Lordship also noted the difficulties with the “clumsily worded” definition in s.230(3) [35] that uses a negative in order to designate status – “whose status is not by virtue of the contract that of a client or customer…”.

It is hard to disagree with the tenor of his Lordship’s remarks, but much easier to take issue with his approach to the conversion of definitions in Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, which effectively amounted to “let’s deal with this another day”. His Lordship’s lamentations may have been more profound if in the present judgment he had attempted to deal with some of the confusion and criticism emanating from this recent decision.

Personal Substitution

In addition to the inclusion of terms which are more usually used to describe an employment relationship [48], the judgment focussed on the issue of personal substitution.

The tribunal had found that Mr Smith had a “limited facility to substitute” [25]. If he was offered a more lucrative role for example, he would offer the initial work to another Pimlico operative. The Supreme Court disagreed with the Court of Appeal that this rose from an “informal concession” on the part of Pimlico, preferring instead to assume that this arose from a contractual right [25]. The court used this to distinguish Halawi v WDFG UK Ltd (t/a World Duty Free) [2014] EWCA Civ 1387, a case in which Lord Wilson concludes that the right to substitute was not a contractual right. [31]

Lord Wilson also stated that, in certain cases, it would be appropriate to examine the significance of the claimant’s right to substitute by reference to whether the dominant feature of the contract remained personal performance on his part. In the present case, substitution was for another Pimlico operative, and moreover if an external contractor was brought in due to the need for a specialist, the operative would still be carrying out the basic work. [24]-[25]. Therefore, despite the use of pronouns directed to the operative, “the dominant feature of Mr Smith’s contract with Pimlico was an obligation of personal performance.”

Client or Customer

The Supreme Court found that the conclusion of the tribunal that an ‘umbrella contract’ existed was a legitimate one. However, the Supreme Court did not, despite counsel’s submissions, go further and address the relevance of a finding under s.230 of the 1996 Act that contractual obligations existed and operated during assignment only. This is likely to be a further area of litigation in relation to the gig economy with which, at some point in the not-to-distant future, the highest courts in the land will be required to grapple.

The Contract Itself

One of the issues for Pimlico was the “apparently inconsistent” provisions in its contract with Mr Smith [38]. Pimlico’s attempts to exert substantial control over its workers and seemed at odds with the self-employed status they sought to grant to their operatives. These attempts at “choreography” [16] by Pimlico were not looked on favourably, and could have been another factor behind the court’s decision.

The Nature of the Supreme Court’s Exercise

Lord Wilson was at pains to point out that the conclusion of the tribunal was one which it was “entitled” to come to [27]. His Lordship noted that the “proper disposal” of the case required the court to declare that “on the evidence before it, the tribunal was, by a reasonable margin, entitled so to conclude.” [49]. This means that, despite the helpful comments made by the Supreme Court, an examination of different factors and the individual facts of the case remain paramount, and as such difficulties remain when advising clients on the merits of a case. This can only be done via careful analysis of previous cases, the precise circumstances of the case, and a thorough understanding of the tribunal process.