Employment status has been a hot topic discussed at our Employment Workshops and HR forums in the last couple of years in light of numerous high profile decisions in the courts and tribunal as well as the publication of the Taylor Review on Modern Working Practices.
The issue appears to continue to gain traction, especially with the Supreme Court’s recent decision in the case of Pimlico Plumbers Ltd v Smith.
Mr Smith was engaged by Pimlico Plumbers for over five years as a plumber. He signed documentation at the commencement of his employment stating he was an independent self-employed contractor. Mr Smith provided his own tools and was under no obligation to accept work from the Company. Moreover he was registered for VAT, submitted invoices to Pimlico Plumbers and filed tax returns to HMRC declaring he was self-employed.
Matters deteriorated when Pimlico Plumbers terminated Mr Smith’s engagement following which Mr Smith argued he was a worker, not self-employed.
One of the main arguments submitted by Mr Smith was that he had a limited ability to appoint a substitute, namely that the substitute had to be an individual associated with Pimlico Plumbers, and therefore argued he was under an obligation to provide personal service.
The Supreme Court agreed with Mr Smith and upheld the earlier judgements of the Employment Tribunal, Employment Appeal Tribunal and the Court of Appeal namely that Mr Smith was a worker despite his contractual documentation stating he was self-employed.
Unfortunately this case does not provide any certainty or more importantly closure for employers about the issue of status, mainly because each case is fact sensitive.
Employment status will therefore remain a complex area, and will continue to do so as long as individuals question their employment status. Therefore employers should ensure they follow best practice when recruiting employees, workers and self-employed contractors, such as ensuring any contractual documentation reflects the reality of the working relationship. Failure to correctly identify a worker or employee could be very costly.
Firms looking for advice on HR and employment law issues relating to employment status can speak to Miss Sally Morris via 01905 610410 or email sally.morris@mfgsolicitors.com.
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