Pimlico plumber subbie wins right to claim £74,000 in backdated holiday pay

Could your subbies do this to you?

Pimlico Plumbers have hit the headlines again this month after Gary Smith – who is arguably Britain’s most famous heating engineer – won a landmark victory in his long-running legal battle against the company. The Court of Appeal overturned an earlier decision which blocked his claim, effectively awarding Smith £74,000 as compensation for the lack of unpaid leave during a six-year stint with the firm. The judge discarded established limitations and decided Smith could back date his claim over his entire service, meaning his claim went from being worth a potential £24,000 to £74,000.

Smith worked happily for Pimlico Plumbers between 2005 and 2011 as a self-employed subcontractor on very generous rates, far higher than employed rates, taxed under the lower rate CIS tax rather than PAYE. He then sued the company for employment rights after leaving due to a dispute about working hours, following his recovery from a heart attack.

Michael Ford QC, engaged by TMP solicitors to represent Smith, said the judgment was of importance to all ‘workers’ denied the right to paid annual leave. And a string of trade bodies and accountancy firms have lined up since the judgement was published to warn firms that any self-employed subbies they use could also benefit from making similar claims against them.

Ian Anfield, managing director of Hudson Contract, the largest payer of subcontractors in the UK, points out that whilst this ruling “ups the ante”, it is important to remember that not all subbies are automatically ‘workers’.

He said:

 The key fact in the Smith v Pimlico Plumbers case was that very early on an Employment Tribunal found Smith was a ‘worker’ – without that ruling the latest simply would not have happened.

Smith’s legal advisors, TMP Solicitors, raised a similar case against one of our clients, also a plumbing and heating firm, which went to tribunal in Leeds in 2019. Unlike in the Pimlico case the judge dismissed the claim against our client, refused permission to appeal and the case ended there. We proved that despite what was going on at the same time with Pimlico, if done properly, contractors could still use self-employed subbies without any lingering liabilities to worry about.

“However, the bigger picture is that many users of subbies will be at risk. We have seen an explosion of so-called commercial contractors and employment agencies setting up CIS payroll companies to generate cash. The vast majority cut corners and wouldn’t have the funds or the knowledge to deal with complex cases. This places their clients at huge risk so there could be thousands of subbies out there eyeing Pimlico-type claims. If the economy turns and things tighten up we can expect to see lots of these cases go to court.

“During the last recession, before most of our competitors even existed, we fended off a number of spurious worker claims and our experience goes back even further than that.

“The question for potential clients reading this newsletter is whether their current arrangements are watertight and can stand up to scrutiny. There’s no doubt this ruling by the Court of Appeal has upped the ante by increasing financial liabilities if a status case is lost, so it must be time to re-examine and scrutinise the credibility of what payroll companies claim they bring to the table.

“Hudson successfully defended one of the UK’s first limb (b) claims which went to the EAT in the 2000s, when a family of five shuttering joiners from Leeds brought a ‘worker’ claim backed by their union.

"As the UK’s largest payer of CIS subcontractors, Hudson pays more than 30,000 subbies each week and more than 70,000 different subcontractors in a year – none have ever been reclassified as workers and the recent Pimlico ruling does nothing to change that.’’