A plumbing and heating engineer who worked under a contract by which he was free to accept or reject offers of work, was unsupervised and bore some of the financial risk of the work, has won the right to be treated as a “worker” for the purpose of statutory rights, in a decision by the UK Supreme Court.

Five Justices unanimously dismissed an appeal by Pimlico Plumbers Ltd against a decision of the Court of Appeal, affirming the employment tribunals, that although Gary Smith was not an employee and was not entitled to claim unfair dismissal, he was a “worker" within the meaning of s 230(3) of the Employment Rights Act 1996 and reg 2(1) of the Working Time Regulations 1998, and had been in “employment" for the purposes of s 83(2) of the Equality Act 2010. He was therefore entitled to complain that an unlawful deduction had been made from his wages, that he had not been paid for a period of statutory annual leave and that he had been discriminated against by virtue of his disability.

Lord Wilson, with whom Lady Hale, Lord Hughes, Lady Black and Lord Lloyd-Jones agreed, said it was "conceptually legitimate as well as convenient" to treat the three tribunal rulings in Mr Smith’s favour as having been founded on a conclusion that Mr Smith was a “worker" within s 230(3)(b) of the 1996 Act, as the regulations contained an identical definition and case law had suggested that the meaning of “employment" in s 83(2) of the Equality Act was also essentially the same.

Proceeding on that basis, if Mr Smith was to qualify under s 230(3)(b), it was necessary for him to have undertaken to personally perform his work or services for Pimlico Plumbers, and that the company be neither his client nor his customer.

It was relevant that when working for Pimlico Mr Smith had a limited facility (not found in his written contracts) to appoint another Pimlico operative to do a job he had previously quoted for but no longer wished to undertake, but it was helpful to assess the significance of this "right to substitute" by considering whether the dominant feature of the contract remained personal performance on his part. In this case the terms of the contract were clearly directed to performance by Mr Smith personally, and any right to substitute was significantly limited by the fact that the substitute had to come from the ranks of those bound to Pimlico in similar terms. Consequently, the tribunal was entitled to hold that the dominant feature of Mr Smith’s contract with the company was an obligation of personal performance.

On the issue of whether Pimlico Plumbers was a client or customer of Mr Smith, Lord Wilson said the tribunal had legitimately found that there was an umbrella contract between the parties, i.e. one which cast obligations on Mr Smith even when he was between assignments for Pimlico. It was therefore not necessary to consider what impact a finding that there was no umbrella contract would have had on the analysis. Looking at the wording of the written contractual documents, on the one hand, Mr Smith was free to reject a particular offer of work, and was free to accept outside work if no work was offered by any of Pimlico’s clients. He also bore some of the financial risk of the work, and the manner in which he undertook it was not supervised by Pimlico. However, there were also features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. These included Pimlico’s tight control over Mr Smith’s attire and the administrative aspects of any job, the severe terms as to when and how much it was obliged to pay him, and the suite of covenants restricting his working activities following termination. Accordingly, the tribunal was entitled to conclude that Pimlico could not be regarded as a client or customer of Mr Smith.

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