In Pimlico Plumbers Ltd and Mullins v Smith  UKSC 29 the Supreme Court considered the latest in a stream of cases about the employment status of so-called “independent contractors” and which employment rights they should be entitled to receive.
This is a particularly important area for schools where support staff are often engaged on a casual or independent contractor basis e.g. sports coaches, music teachers.
Mr Smith had worked as a plumber for Pimlico Plumbers (“PP”) for around five years before he suffered a heart attack. A few months later his contract was terminated and Mr Smith subsequently claimed unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay, unlawful deductions from wages and disability discrimination.
The employment tribunal had to determine as a preliminary issue whether or not Mr Smith was either:
- an “employee” (in which case he could bring all the above claims);
- a “worker” (in which case he could bring some claims such as discrimination, failure to pay for annual leave); or
- an independent contractor (in which case he was only entitled to what was due under the terms of his contract).
Relevant factors included that Mr Smith:
- considered himself an independent contractor while working for PP;
- was expected to complete a minimum of 40 hours a week (although he didn’t have to accept work from PP, and it was not obliged to offer him any work);
- had to drive a PP branded van, wear a PP uniform, and carry a PP identity card;
- had to provide his own materials and tools;
- took on a significant proportion of the commercial risk e.g. if a customer failed to make payment, he also had to provide insurance; or
- was subject to post-termination restrictive covenants preventing him from competing as a plumber in the Greater London area for three months following termination;
- was registered for VAT, submitted invoices to PP and filed tax returns on the basis that he was self-employed; and
- there was no right of substitution in the contractual documentation i.e. the contract didn’t allow Mr Smith to sub-contract the work to someone else (in practice, however, PP plumbers could swap assignments between themselves).
The Supreme Court agreed with the employment tribunal’s original decision that Mr Smith was a “worker” and so dismissed PP’s appeal.
There were two main factors in the Supreme Court’s reasoning:
- The “dominant feature” of the Mr Smith’s relationship with PP was “an obligation of personal performance”. The substitution right was extremely limited.
- PP was not a client or customer of Mr Smith. Mr Smith had to work at least 40 hours per week and PP exercised “tight control” over Mr Smith “reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van … carry its identity card, closely follow the administrative instructions…” There were also “severe terms” regarding when Mr Smith would be paid and “references to ‘wages’, ‘gross misconduct’ and ‘dismissal’” as well as restrictive covenants applicable after termination.
Practical Implications for schools
On this occasion the Supreme Court confined itself to the particular facts of this case and declined to articulate an over-arching set of principles on the vexed issue of employment status.
However, a number of useful applications for schools may still be drawn:
- It is highly advisable to conduct regular audits of all staff engaged on an independent contractor basis in order to check that e.g. music teachers, club coaches, swimming instructors are being correctly classified. The position of individuals may well change and is unlikely to remain static;
- It is critical to have well-drafted contractual documentation which accurately reflects the reality of the relationship on the ground (the Supreme Court was notably critical of the inconsistent terms in the contracts PP had been using); and
- Schools should be alert to the risk that claims may go back several years (e.g. in relation to holiday pay) and make sure that clear records are kept of contracts, invoices, tax treatment etc.
Schools and Charities | Adam Taylor
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