Supreme Court ruling: Pimlico Plumbers self-employment status flushed down the drain

A seven-year legal dispute came to an end – perhaps – this week when the Supreme Court decided freelance plumber Gary Smith is entitled to make a claim for holiday and sick pay against Pimlico Plumbers, the company he used to work for.

Mr Smith’s contract lay at the heart of the wrangle, and by ruling that he was not self-employed, the stage is now set for the status and working rights of thousands of people who have joined the booming gig economy to come under fresh scrutiny.

Are Hudson Contract clients affected by the ruling? The short answer is, ‘Yes’. But only in a good way.

More about that in a moment.  But first, a brief recap of the dispute itself. 

To cut a long story short, Mr Smith was a self-employed plumber who carried out work for Pimlico Plumbers for six years until he had a heart attack and wanted to reduce his hours.

Contracts were watered down

Pimlico Plumbers refused Mr Smith’s request to move to a three-day week.  He was dismissed, and the employment dispute began – with Pimlico Plumbers losing the case at every stage of the process, up to and including the Supreme Court ruling.

The courts have poured over the contract between Pimlico Plumbers and Mr Smith.  And whilst there were some features of a self-employed contract, the plumbing firm had watered them down to such an extent that it changed the relationship from business to business to one of a ‘worker’ – and under the Employment Rights Act, ‘workers’ are entitled to some basic employment rights.

Had Mr Smith been legitimately self-employed, he would have been perfectly entitled to reduce his hours, turn down work, and work for whoever else he wanted to. But his contract removed these rights. 

He should also have had the right to sub-contract his work to any other suitably qualified freelance plumber, or to bring a helper (at his own expense) to do the heavy lifting, and get through more work in less time if that’s what he chose to do.  But the contract’s substitution terms were so restrictive he couldn’t do any of this – his right amounted to little more than being permitted to swap shifts with another employee.

Now Pimlico Plumbers boss blows another valve

Having followed – and written – about the London plumbing firm over the years, the puns have been hard to resist.  ‘Contracts springing a leak’ . . . continuous appeals from Pimlico Plumbers owner Charlie Mullins have been ‘like putting expensive parts on a rusty old boiler that was clearly beyond repair’…  and employment status ‘flushed down the drain’.

And now?  Mr Mullins says he’s considering a further appeal . . . this time to a European court.

He described the decision of the three High Court judges in the latest round of the battle as ‘terrible’, telling journalists:  “This decision will potentially leave thousands of companies employing millions of contractors wondering if one day soon they will get a nasty surprise from a former contractor demanding more money, despite having been paid in full years ago.”

Clients have understandably been asking whether or not the judgement affects Hudson Contract, and as I said, it certainly does.

I believe the earlier Employment Appeal judgement set out some useful pointers as to where Pimlico went wrong and how far a client can go when agreeing terms with freelance contractors.

In fact, it helps us to underline:

• Why we refuse to modify our contracts of self-employment
• Why we insist that sub-contractors are treated like sub-contractors
• Why we can work only with clients who are willing to follow our procedures and comply with our auditing

Our own lawyers will no doubt use the Pimlico judgement to drive home the point that for all the reasons Pimlico Plumbers has lost its employment status claim, Hudson Contract wins those brought against us or our clients. 

And this is why we happily continue to indemnify every client against the financial consequences of an employment tribunal claim: Unlike the Pimlico guys who are taxed as self-employed but act and are treated like employees, operatives contracted to us are legitimately self-employed.