The Supreme Court has handed down its long anticipated judgment in Pimlico Plumbers Ltd and Mullins v Smith ([2018] UKSC 29). In recent years, the courts have grappled with applying the various statutory definitions of "worker" to the rapidly evolving labour market and the gig economy (see feature article "The gig economy: shifting sands in employment status", www.practicallaw.com/2-639-5933). It had been hoped that this decision would bring some much-needed clarity for both businesses and individuals on how a workforce in the gig economy should be properly categorised.

Regrettably, the judgment does not provide that clarity, although on the facts in this particular case, the court agreed that the individual concerned was a worker (see box "Uncertain times").

Determining employment status

Mr Smith was engaged by Pimlico Plumbers as an engineer between 2005 and 2011. Mr Smith brought a number of claims in the employment tribunal. As a preliminary issue, the tribunal was asked to determine Mr Smith's employment status, with Mr Smith arguing that he was an employee and Pimlico maintaining that he was self-employed. Both the tribunal and the Employment Appeal Tribunal found that while Mr Smith was not an employee, he was a worker (ET2374916/2011; UKEAT/0495/12/ DM).

The Court of Appeal agreed with the lower tribunals and held that Mr Smith was a worker within the definition of limb (b) of section 230(3) of the Employment Rights Act 1996 and was "in employment" for the purposes of the Equality Act 2010 (limb (b) worker) ([2017] EWCA Civ 51; see News brief "Worker status: a busted flush?", www. practicallaw.com/3-639-2689). It held that the key elements of the definitions were satisfi ed, namely that:

  • There was a contract to personally perform work.
  • Pimlico was not a customer or client of Mr Smith.

Uncertain times

Despite high expectations for a set of clear guiding principles around worker status from the Supreme Court, the decision in Pimlico Plumbers Ltd and Mullins v Smith is not likely to stem the fl ow of litigation in this area ([2018] UKSC 29). As this is the latest in a series of judgments that are largely limited to their facts, the calls for clarifi cation in the form of legislation are only set to grow louder. The government consultation on employment status has recently closed, and most practitioners and people within industry will now be looking to the government to provide much needed certainty (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/679853/
FINAL_-_Employment_Status_consultation_-_FOR_UPLOADING_and_PRINTING.pdf ; www.practicallaw.com/w-013-9199).

Pimlico appealed. Although the Supreme Court did not give much by way of general guidance in its judgment, it does provide a useful reminder of some of the key issues that a court or tribunal will consider when determining whether an individual is an employee, a worker or self-employed.

Personal service

In order to qualify as a limb (b) worker, Mr Smith firstly had to demonstrate that he had undertaken to perform personally his services for Pimlico. The tribunal had made a finding of fact that Mr Smith could, and did as a matter of practice, substitute work to other Pimlico engineers. He did so in circumstances where he was unable or unwilling to undertake a particular job. Pimlico therefore argued that, as there was no requirement for Mr Smith to personally undertake any particular job, he could not be a worker.

The Supreme Court noted that, while the sole test is the obligation of personal performance in some circumstances (this case being one of them), it is useful to adopt the approach advocated in Mirror Group Newspapers Ltd v Gunning of considering whether personal service is a dominant feature of the contract ([1986] IRLR 27). Applying that test, the court considered that the practice of substitution in this case did not go so far as to negate personal service; personal service remained the dominant feature of the contract. The widening of the concept of personal service is consistent with the recommendations of the Taylor Review to construe rights of substitution narrowly so that only the broadest power, where a company or end user has no interest in the identity of the substitute, provided only that the work gets done, will be inconsistent with a requirement to perform services personally (see News brief "The response to the Taylor review: it's good to talk...?", www.practicallaw.com/w-013-3462).

Client or customer?

The second part of the definition of a limb (b) worker is unusual in that it defines a category of people by reference to a negative; that is, that the person does not deal with the other party (Pimlico in this case) as a client or customer. It was through that prism that the court considered the issue of mutuality of obligation and subordination. The court examined the extent of the contractual obligation on Pimlico to offer Mr Smith work and of Mr Smith's obligation to accept work offered to him. It also considered whether a lack of mutuality between assignments was indicative of a lack of subordination and therefore consistent with Pimlico being no more than a client or customer.

On the issue of mutuality of obligation, Pimlico's contractual documents were inconsistent. The court upheld the Court of Appeal's finding that, if work was available, Pimlico had an obligation to offer it to Mr Smith, and Mr Smith had an obligation to keep himself available for up to 40 hours each week, despite the fact that he could, if he so chose, decline any particular job. That fact was found to be a mere concession to the contract.

On the issue of subordination, the court did not take the opportunity to affirm Secretary of State for Justice v Windle and Arada on the relevance to limb (b) worker status of a finding that contractual obligations subsisted only during assignments, with a lack of subordination between assignments ([2016] EWCA Civ 459; www. practicallaw.com/2-630-2627). It also did not consider whether Mr Smith's ability to make a significant profit or loss on any job, in circumstances where Pimlico was considered to have an overall "grip" on his economy (for example, by setting hourly rates and a maximum mark-up on materials), was inconsistent with worker status.

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