Pimlico and Hermes 'worker' rulings could affect gig economy

The Supreme Court ruling in the Pimlico Plumbers case and the Employment Tribunal decision involving Hermes help to clarify the difference between ‘worker’ and ‘self-employed’ and could have a significant impact on the gig economy.

The long running dispute involving London based Pimlico was initiated by one of its plumbers, Gary Smith.

Mr Smith had carried out work for the company for almost six years. He had entered into two agreements, stating that the company was not obliged to offer him work and he was not obliged to accept it.

The company manual stated that he was required to wear a company uniform, carry a company ID card, use a company mobile phone and hire a company van when carrying out the work. He was expected to work five days per week for 40 hours.

He had the right to decline jobs or send another company operative in his place if he could not attend.

He brought claims for unfair dismissal, unlawful deductions from wages, unpaid annual leave and disability discrimination. The Employment Tribunal concluded that he was not a "worker" under a contract of service for the purposes of the unfair dismissal claim, but he was a worker within the meaning of the Employment Rights Act, the Working Time Regulations 1998, and he was in "employment" within the meaning of the Equality Act 2010.

Those decisions have now been upheld by the Supreme Court. The justices said Mr Smith should be classed as a worker, not as self-employed, meaning he is entitled to various employment rights such as holiday pay.

In giving his ruling, Lord Wilson, said: “Although the contract did provide him with elements of operational and financial independence, Mr Smith’s services to the company’s customers were marketed through the company.

“More importantly, its terms enabled the company to exercise tight administrative control over him during his periods of work; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.”

The chief executive of Pimlico Plumbers, Charlie Mullins, criticised the decision and said he would consider further legal action. Speaking immediately after the hearing he said: “The case is not over. I will be talking to my lawyers about where we go from here. We could possibly go to a European court of law. The government must now clarify the law and I hope to be part of that.”

The Hermes case involved 65 of its drivers. The Employment Tribunal in Leeds held that they were workers, not self-employed contractors. The ruling could eventually affect 14,000 Hermes couriers who are on similar contracts.

It’s likely that both the Pimlico and the Hermes rulings will have an impact on the growing gig economy and may influence several other cases coming before the courts involving companies that rely on people they classify as self-employed.

The government is already considering recommendations made in the Taylor Review of working practices to improve worker rights, but no firm decisions have yet been made.

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law.

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