Most of us know the difference between being employed and being
self-employed (or at least we think we do). And in everyday
laymen's terms, the difference is relatively straightforward
and obvious – if you are employed, you work for someone else
and, if you are self-employed, you 'work for yourself'. But
in the eyes of the law, the distinction is not always so
straightforward, particularly because of a third category of
'employment status' – workers.
As the Office of Tax Simplification explained in their March
2015 Employment Status report, "employment status is a complex
and wide-ranging subject that many have said has no real solution
– and that if we did manage to 'solve it', we should
immediately move on to world peace as we'd clearly be on a
On Friday (10 February 2017), the Court of Appeal
handed down its judgment on this very issue, in the case of
Pimlico Plumbers v Smith. Confirming the decision of the
Employment Tribunal and Employment Appeal Tribunal, the Court of
Appeal went beyond the strict terms of the contract between the
parties, and decided that the plumbers engaged by Pimlico were in
fact workers and not self-employed.
It was noted in the judgment that this was a case of a business
model "under which operatives are intended to appear to
clients of the business as working for the business, but at the
same time the business itself seeks to maintain that [the
operatives are] independent contractors" rather than employees
or workers. The Court of Appeal have therefore found a leak in the
contracts between Pimlico and its plumbers, and held that in
practice, these individuals are workers.
This distinction is important because, unlike self-employed
contractors, workers are entitled to employment rights such as the
national minimum wage and holiday pay.
With the Court of Appeal's decision, there is now a growing
body of case law on this topic. In fact, one of the first notable
employment decisions of 2017 came when the Employment Tribunal
found that a City Sprint bicycle courier was a worker and not
self-employed, and was therefore entitled to holiday pay and other
wider protections not afforded to the self-employed.
The employment tribunal's decision in the Uber case at the
end of last year has also been well documented. Despite signing a
contract clearly intended to create a self-employment relationship,
the tribunal looked at the relationship in practice and found that
the drivers were in fact 'workers'. See our earlier update
So as the meter continues to run with the Uber case (with an
appeal to the EAT), and as employers arguing couriers in the City
Sprint case were self-employed are told to get on their bike, the
decision from the Pimlico Plumbers case suggests that the issue of
employment status will remain in the employment law and HR pipeline
for the foreseeable future. Employers and 'employees' alike
should be clear about the nature of the relationship between the
parties and should take advice where appropriate.
Employment status remains firmly on the agenda for 2017, and
world peace may have to wait for now. Businesses should
Ensure contracts are well drafted and robust; and
Ensure that the relationship in practice is not materially
different from the relationship on paper. With each case turning on
its own facts, and a growing body of decisions finding in favour of
the 'worker', it is more important than ever to take
The material contained in this article is of the nature of
general comment only and does not give advice on any particular
matter. Recipients should not act on the basis of the information
in this e-update without taking appropriate professional advice
upon their own particular circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In SSE Generation Limited v Hochtief Solutions AG and another decided on 21st December 2016, the Court of Session in Scotland considered a contractor's potential design liability under the NEC Form of Contract.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).