Experts respond to ‘landmark’ employment status ruling
by Alan Little
The Supreme Court ruled yesterday that an employment tribunal was ‘entitled to conclude’ that a plumber, Gary Smith, who worked only for Pimlico Plumbers for six years, was a worker, not a self-employed contractor.
Throughout his time with Pimlico Plumbers, Smith had been VAT-registered and had paid self-employment tax. He will now be entitled to claim employment rights, such as paid holiday and sick leave. Smith took legal action against Pimlico Plumbers following a heart attack in 2010. He asked for a reduction in the number of days per week he had signed up for with the firm, from five to three. But, the company refused, taking away the branded van Smith had hired. Smith claims that he was dismissed.
Julia Kermode, CEO of the Freelancer and Contractor Services Association (FCSA), described the ruling as a ‘landmark result’ that sends a clear message to firms engaging self-employed people to assess their self-employment arrangements were genuine.
She added: “Employment status is complex and this case illustrates the need to retain three tiers of employment status as Gary Smith was neither employed nor self-employed. He was required to work at least 40 hours per week, was required to wear a Pimlico Plumbers uniform and drive a branded van. He also had to seek permission to take off and was restricted in his ability to compete for other plumbing work. He was clearly a worker and not self-employed despite the intention of Pimlico Plumbers.”
Kermode urged the government, which is currently consulting on employment status, not to respond to the ruling with more red tape or further legislation, as genuinely self-employed people required neither. She added: “They are driving the UK economy right now so we should support them, not punish them.” Affirming that it was right for workers such as Smith to be protected from exploitation and have access to statutory rights and benefits, Kermode supported a clampdown on false self-employment and concluded that this ruling was likely to ‘change the employment landscape forever’.
Seb Maley, CEO of employment status specialist and contractor tax consultancy, Qdos Contractor, said that the ruling illustrated the current blurred distinction between employment and self-employment, which made misinterpretation easy.
ContractorCalculator CEO, Dave Chaplin, welcomed the ruling for providing ‘excellent’ clarification on employment status law. He suggested that it could show that many public sector contracting professionals who had been subject to new off-payroll tax rules had been falsely designated as ’employed for tax purposes’, when legally they may not be considered employees at all.