Pimlico Plumbers Ltd & Anor v Smith

Worker status under limb (b) requires two elements. The individual must undertake personally to perform work or services. The other party must not be a client or customer of a business carried on by the individual. An unfettered contractual right to substitute is inconsistent with personal service. A conditional right depends on its limits. The business/customer issue requires an evaluative assessment of the whole relationship, including control, subordination, integration, continuing obligations and restrictive covenants. Contract documents must be read with their practical background and operation. A contractual obligation to be available for work may coexist with a right to refuse particular assignments. An appellate court should respect a specialist tribunal’s evaluation where it applies the law and reaches a permissible conclusion.

A plumber worked for a plumbing company under agreements describing him as self-employed. The Employment Tribunal held that he was not an employee, but was a worker under section 230(3)(b) of the Employment Rights Act 1996 and regulation 2(1) of the Working Time Regulations 1998, and that his relationship fell within employment under section 83(2)(a) of the Equality Act 2010. The EAT upheld that decision, dismissing the company’s appeal and the plumber’s cross-appeal: UKEAT049512DM. The company and its owner appealed, challenging personal service, substitution, minimum hours and the tribunal’s overall business/customer evaluation. The central issues were whether the agreement required personal performance and whether the company was a client or customer of the plumber’s own business.

The appeal was dismissed unanimously. Davis LJ agreed with the judgment of the Master of the Rolls. Underhill LJ agreed with the result and gave substantially the same reasons in a separate judgment.

1. The statutory worker definition has two elements. The individual must undertake personally to perform work or services. The other party must not have the status of a client or customer of a business carried on by the individual. The same analysis applied to the relevant provisions of the Employment Rights Act 1996, the Working Time Regulations 1998 and the Equality Act 2010.

2. The requirement of personal performance is determined by the contractual arrangements. An unfettered right to substitute is inconsistent with personal service. A conditional right may or may not be consistent, depending on the nature and degree of the restriction. The 2009 Agreement contained no express right of substitution. Informal job-swapping and the use of assistants did not establish an unfettered contractual right, and no such term could be implied under the principles in Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72.

3. The Manual formed part of the contractual materials. Its provision for a normal 40-hour week was not inconsistent with the term that the company need not offer work and that the plumber need not accept a particular assignment. Read in context, the arrangement required availability for work on a broadly full-time basis, subject to practical flexibility. The tribunal was entitled to reach that conclusion.

4. The business/customer question required an evaluative assessment of all relevant facts. No single factor, including subordination, was decisive. The tribunal was entitled to rely on personal service, minimum availability, the company’s extensive control, restrictive covenants, the use of branded vans and the plumber’s integration into the company’s operations. The company was properly regarded as a principal, not a client or customer of the plumber’s business.

5. Underhill LJ added that casual working may be relevant to status during periods of work even where there are no legal obligations between engagements. Mutuality of legal obligations remains essential where status during non-working periods is itself in issue. He also observed that the [2011] UKSC 41 approach might have been available, but it was unnecessary to decide the case on that basis.

6. The Employment Tribunal made no error of law or principle and reached a conclusion within the range of judicially permissible outcomes. No remittal was required.

• Court of Appeal (Civil Division) — Appeal dismissed. [2017] EWCA Civ 51.
• Employment Appeal Tribunal — On 21 November 2014, dismissed the company and owner’s appeal and the plumber’s cross-appeal, upholding the Employment Tribunal’s decision. UKEAT049512DM.
• Employment Tribunal — Pre-hearing review decision dated 16 April 2012: the claimant was not an employee, but was a worker and was employed for the purposes of the relevant statutory claims.