Pimlico Plumbers: Self-employment Contracts Spring a Leak
14th March 2016 | Ian Anfield
In London, the clean, shiny vans of Pimlico Plumbers are a familiar sight, as are their courteous, skilled workforce. The company, owned by flamboyant Charlie Mullins, modestly bills itself as ‘the most well-known plumbing company in the world’. It boasts a long list celebrity customers, operates 24/7 and charges as much as £250 an hour for anyone unfortunate enough to require Drain Jetting & CCTV between midnight and 7am.
To the outside world, Pimlico employs a workforce of 200 distinctively-uniformed engineers and technicians. But appearances can be deceptive, as a recent employment tribunal has shown.
While customers could be forgiven for assuming the Pimlico Plumbers workforce were employed by the company, most were in fact self-employed sub-contractors – at least, for tax purposes.
The firm’s contractual arrangements came under the spotlight at the tribunal hearing of Gary Smith, from Kent, who claimed he was dismissed after a heart attack and as a result, Pimlico Plumbers have been handed down a judgment that overturns the self-employed status of their plumbers.
Whilst Mr Smith was not given full employment status, he was found to be a ‘worker’ and protected by equality laws, which entitles him to holiday pay and protection against disability discrimination.
Self-employed plumbers are nothing new
Hudson Contract engages many self-employed plumbers for our clients without any risk – or issues – whatsoever. Plumbers, after all, are generally highly skilled tradesmen who often choose to be self employed to maximise their earning potential.
The problems arise when a firm like Pimlico Plumbers wishes to build its brand on characteristics that are at odds with self-employment.
Having studied the original tribunal judgement and subsequent unsuccessful appeal, it is clear where Pimlico Plumbers went wrong. The hearing decided that ultimately it was the level of control over the way in which the plumbers supplied their services meant Mr Smith was entitled to worker status.
Pimlico Plumbers made some classic (and to my mind, surprisingly naïve) mistakes in the way they drafted their contracts and with the relationship they wished to have with the plumbers.
For example, the firm thought it could impose minimum working hours, an exclusivity clause ensuring the plumbers couldn’t work for anyone else, and they demanded personal service. They believed their contradictory contractual clauses calling the workers self-employed and referring to substitution would protect them.
For all the reasons that Pimlico Plumbers’ contracts failed, Hudson Contract wins
It all goes to show that when it comes to contracts of employment, then DIY is not recommended.
Yes, you can draft your own contracts. Or you can take someone else’s and steal it. Or you can ask a trusted professional advisor to draw up your contracts in all good faith. (For the record, we have no idea how Pimlico Plumbers arrived at their contracts of self-employment.)
The lessons to be learned is that there is more to a legitimate contract of self-employment than at first meets the eye . . . and that if you get it wrong, the buck stops with you. And while Pimlico Plumbers says it will appeal the judgment, most companies simply don’t have sufficiently deep pockets and the reserves of nervous energy required to continue the fight.
Our contracts do not contradict themselves, and we constantly warn clients against the temptation of treating or presenting subcontractors like employees. If you need exclusivity, fixed working hours and people who turn up presenting themselves as your employees, you should employ them.
And if you wish to draw on the pool of self-employed labour, Hudson Contract provides the advice, method, and auditing to facilitate this without the risk of a Pimlico Plumbers-style judgment against you.
For once, I am happy for construction union UCATT’s General Secretary Brian Rye to have the final word. He comments: "It is all about the right and wrong way of employing a workforce".
Can you afford the fine if HMRC decides your self-employed operatives are non-compliant?
Run your numbers through our liability calculator and see how big a risk you are taking.