Pimlico Plumbers Ltd and another v Smith

A person is a limb (b) worker where the contract requires personal performance and the other party is neither a client nor a customer of a profession or business carried on by that person. A limited right to substitute another person may remain consistent with personal performance. The court may assess whether personal performance remains the contract’s dominant feature.

Client or customer status requires an evaluation of the whole relationship. Relevant matters include integration into the principal’s operations, control, subordination, economic dependence and commercial risk. There is no single decisive factor. Tax treatment and some independence or financial risk do not prevent worker status where contractual control and economic dependence point the other way.

Mr Smith performed plumbing work for Pimlico Plumbers Ltd under agreements describing him as an independent contractor. After the relationship ended, he brought claims concerning deductions from wages, annual leave and disability discrimination. The employment tribunal found that he was not an employee under a contract of service, but was a worker for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998, and was in employment under the Equality Act 2010.

The Employment Appeal Tribunal dismissed Pimlico’s appeal. The Court of Appeal also dismissed its appeal: [2017] EWCA Civ 51; [2017] ICR 657. Pimlico appealed to the Supreme Court, contending that the tribunal had inadequately addressed whether Mr Smith undertook personal performance and whether Pimlico was his client or customer.

1. Appeal dismissed. Lord Wilson, with whom Lady Hale, Lord Hughes, Lady Black and Lord Lloyd-Jones agreed, held that the tribunal was entitled to find that Mr Smith was a limb (b) worker within section 230(3) of the Employment Rights Act 1996. His substantive claims could therefore proceed in the employment tribunal.

2. Personal performance was required. A contractual right of substitution does not invariably defeat that requirement. Its scope and significance must be examined. The tribunal was entitled to find that Mr Smith’s only substitution facility was to arrange for another Pimlico operative to undertake the work. Assistance from an apprentice or specialist was not substitution because Mr Smith continued to perform the basic work.

   The limited facility resembled the distribution or swapping of work within a workforce. It was materially different from an unrestricted right to provide any suitable substitute. The 2009 agreement focused on Mr Smith’s own skills, competence, conduct, appearance, uniform and identity card. Personal performance therefore remained the contract’s dominant feature. The dominant feature is a useful aid, but the ultimate question remains whether the individual undertook personal performance.

3. The tribunal was also entitled to find that Pimlico was not Mr Smith’s client or customer. No single factor determines that issue. Mr Smith could reject particular assignments, undertake some outside work, controlled the technical manner of his work and assumed financial risks. He also presented himself as self-employed for tax and VAT purposes.

   Those matters had to be weighed against Pimlico’s tight contractual control. Mr Smith had to wear its branded uniform, drive its tracked branded van, carry its identity card and comply closely with control-room instructions. The payment terms gave Pimlico a substantial grip over his economy. References to wages, gross misconduct and dismissal, together with restrictive covenants after termination, also militated against client or customer status. The tribunal was, by a reasonable margin, entitled to reach its conclusion.

4. The contract was capable of being construed as an umbrella contract. Pimlico was obliged to offer work when available, while Mr Smith was in principle required to remain available for up to 40 hours over five days, subject to his ability to reject particular assignments. The court therefore left open the significance of arrangements under which obligations exist only during individual assignments.

5. The court proceeded, without reviewing the point, on the basis that the worker definitions in the Employment Rights Act 1996 and the Working Time Regulations 1998 produced the same result as the employment definition in the Equality Act 2010. The three threshold decisions accordingly stood or fell together.

1. United Kingdom Supreme Court: Dismissed Pimlico’s appeal and upheld the determination that Mr Smith was a limb (b) worker: [2018] UKSC 29 .
2. Court of Appeal: Dismissed Pimlico’s appeal from the Employment Appeal Tribunal: [2017] EWCA Civ 51 ; [2017] ICR 657 .
3. Employment Appeal Tribunal: Dismissed Pimlico’s appeal against the three worker and employment determinations. It also dismissed Mr Smith’s cross-appeal concerning employee status.
4. Employment Tribunal: Held that Mr Smith was not an employee under a contract of service, but was a worker under the Employment Rights Act 1996 and the Working Time Regulations 1998, and was in employment under the Equality Act 2010.