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June 20, 2018
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Fight For Your Right: Pimlico Plumbers Ltd v Smith

In Pimlico Plumbers Ltd v Smith, the Supreme Court has upheld the decision of the Court of Appeal that former self employed plumber Mr Smith (the taxpayer) was in fact a ‘worker’ of Pimlico Plumbers Ltd (Pimlico), and is therefore entitled to bring claims against Pimlico in relation to his status as a worker for the company.

Background

The taxpayer, a self employed plumber and heating engineer, worked for Pimlico between August 2005 and April 2011. Pimlico conducts a large scale plumbing business in London.

After suffering a heart attack, Mr Smith made a request to Pimlico that his working schedule be reduced from 5 days to 3 days per week. The request was denied, and Mr Smith was subsequently dismissed.

The taxpayer issued proceedings against Pimlico in an employment tribunal, alleging amongst other things, that he was a worker of Pimlico, and therefore had appropriate rights in accordance with his status as a worker.

The employment tribunals, and in turn the Court of Appeal, found that the taxpayer was a ‘worker’ within the definitions of relevant acts.

Pimlico have appealed the decisions of the tribunals, and the Court of Appeal, bringing the matter to the Supreme Court.

The Case

The Supreme Court reviewed the terms of the taxpayer’s contract with Pimlico, along with the circumstances of his engagement with the company. It was found that Pimlico implemented strict rules and conditions upon the taxpayer in respect of the provision of his services to the company and their clients, including:

  • Normal working hours
  • Appearance and uniform requirements
  • Notification of annual leave
  • How much and when the taxpayer was paid were paid
  • A restriction on working for Pimlico’s competitors upon leaving the company

The Court also looked at the taxpayer’s ability to substitute someone else in their place to perform the work on their behalf. Whilst the contract did allow for substitution, the Court found that there was significant limitation on that right, and the substitute had to come from Pimlico operatives.

Finally, they considered whether Pimlico was a client or customer of the taxpayer. The Court found that the tight control Pimlico had over the taxpayer ‘betrayed a grip on his economy’ and was inconsistent with being a truly independent contractor.

The Result

The taxpayer was found to be a ‘worker’ of Pimlico for the period in question and is therefore able to pursue them under the rights afforded to him as a worker under the Employment Rights Act 1996; the Working Time Regulations 1998; and the Equality Act 2010.

Under such acts, he is able to pursue Pimlico for unlawful deduction from his wages; failure to pay him for the period of his statutory annual leave; and discrimination by reference to disability.

Matters of employment status are decided upon the facts of each case, and so it may only become clear in future cases going forward whether this case has set any form of precedent.

However, for tax purposes, a 'worker' could pay tax in line with employment rules (PAYE and Class 1 NI deducted and paid by employer), or as in the taxpayer's case, in line with self-employment rules (payment of own tax and Class 2 & 4 NI). As with the above case, whether you should pay tax as an employee, or as a self employed individual, will depend upon the circumstances of the engagement.

A record of the full judgement may be found here.

If you have any doubts or queries regarding your employment status, please contact a member of our team for a no-obligation chat.

Contact us today to discuss your tax requirements.
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