March 31, 2017

In the "Gig Economy": When Is a Contractor Not a Contractor?

Pimlico Plumbers Ltd & Anor v Smith [2017] EWCA Civ 51 is the latest in a series of recent cases before the U.K. courts regarding employment status in the “gig economy”. In this case, the Court of Appeal considered whether an individual was a worker or a self-employed contractor.

Mr Smith was a plumber who worked for Pimlico Plumbers Limited (PPL). He sought to bring a number of claims against PPL which were available to him as a worker, but not as a self-employed contractor. The first issue to be decided was therefore the nature of his relationship with PPL. The test for establishing whether Mr Smith was a “worker” turned on two issues: (i) was Mr Smith required to perform his services personally, and (ii) was PPL a customer of a business operated by Mr Smith? On the first issue, the Court held that this depended entirely on the terms of the contract between Mr Smith and PPL. Here, the terms of the contract were clear: there was no right of substitution; personal service was required. On the second issue, the Court held that Mr Smith was not in business on his own account but rather an integral part of PPL’s operations. In coming to this finding, the Court focused particularly on the fact that Mr Smith was required to work a minimum of 40 hours a week for PPL which meant he could not fully control his own work. In conclusion, Mr Smith was found to be a worker and so could pursue his claims against PPL.

This decision is important as it is the first case from the Court of Appeal in the context of the “gig economy” and will therefore be binding on lower courts. However, it is worth remembering that each case will turn on its facts.

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