Is it a giraffe or a zebra – latest development in the gig economy
The topic of employment status has been a hot topic for some time and companies such as Uber, Deliveroo and City Sprint have all been in the press recently. The employee v worker v independent contractor issue seems certain carry on.
The Supreme Court has now considered this issue in the case of Pimlico Plumbers v Smith. There has also been a separate decision relating to Hermes couriers.
What happened in Pimlico Plumbers?
Mr Smith worked for Pimlico Plumbers for six years. He did not work for anyone else. He was VAT registered and payed tax on the basis that he was self-employed.
He was required to use a Pimlico branded van for his work and to agree to the company’s working hours. He had to wear a Pimlico uniform, could only swap with other Pimlico plumbers and his terms and conditions included restrictive covenants if he stopped working for the company.
The court ruled that even though Mr Smith was VAT registered and paid tax as if he was self-employed, he was still entitled to worker’s rights such as holiday and sick pay.
Why is this decision important?
The basis on which an individual works for a company will govern their rights. At one end of the spectrum you have employees who are afforded the greatest level of protection and at the other you have the self-employed who are not entitled to any employment protection rights.
Somewhere in the middle you have workers who are entitled to some important employment rights. If a company uses a lot of self-employed individuals, this could have an important impact on the company’s bottom line.
Another decision from the tribunal brought by a group of Hermes couriers has also confirmed that they were wrongly labelled as self-employed and were in fact workers. This means they will be entitled to minimum wage and holiday pay. This is likely to affect 14,500 Hermes couriers.
What we can do for you
We will be following these decisions up with a closer look at the gig economy, the different rights that individuals may have and the factors that may be important about how these relationships works in practice.
This case may not be a huge turning point, but it is significant and will impact on how contracts are drafted and how these relationships are managed on a practical basis.
Please contact Karin Henson at on 07980 837148 for further information.