The recent verdict by the Court of Appeal ruling against the appeal brought by Pimlico Plumbers could have a massive impact on your business if you use self-employed contractors.
Mr Smith had worked for Pimlico Plumbers for 6 years until a time that he suffered a heart attack. Following his heart attack Mr Smith’s contract was terminated. Mr Smith argued that his position was more of an employee than a self-employed contractor and as such should be entitled to the same benefits offered to employees.
There were some aspects of the contract signed by Mr Smith that would support Mr Smith’s claim. He was required to wear clothes branded with the company logo, he was not allowed to work privately, he was required to work a minimum of 40 hours a week amongst other things.
Whilst the Employment Tribunal did not find that Mr Smith was an employee, it did find that Mr Smith should be considered a worker.
With that finding Mr Smith was therefore entitled to the benefits that a worker would receive. These benefits include:
- Entitlement to NMW
- Entitlement to Holiday Pay
- Tools and materials provided
- Can bring claims for discrimination and whistleblowing
Whilst these are the main points this list is not exhaustive.
Pimlico Plumbers appealed the Employment Tribunal’s decision to the Court of Appeal who upheld the Tribunal’s decision.
The fact that Uber have also recently had a judgement against them in similar and well publicised circumstances would indicate that employees are going to be more and more aware of the fact that they could not be being provided with benefits to which they are entitled.
The businesses that are most likely to be at risk are the ones that use the gig model. One in which temporary positions are common and independent contractors are used for short and long term engagements.
How can this ruling affect me?
It will only affect you if you employ self-employed people as contractors. If all your staff are employees, then it will not affect you.
How will I know if any of my staff are self-employed contractors?
There are distinct definitions of what constitutes an employee, a worker and a contractor. Employees and workers have entitlements with regards to certain benefits. If these benefits are not provided, then they can make a claim against you to the Employment Tribunal.
If your contracts are written in such a way that they can be interpreted as contracts for workers rather than contractors, then you may be at risk.
Even though some of the terms in Mr Smiths’ contract of employment reflected those of a self-employed contractor, there were other terms which implied a worker contract which was why the Tribunal and subsequent appeal courts found in his favour.
If you have any doubt, there is more information on it in the HMRC website.
What will happen if I have not been providing the benefits that I should have?
If you have an employee or worker and have not been providing them with the benefits to which they are entitled, then you run the risk of a claim against you at the Employment Tribunal.
How can I be sure that I will not be at risk?
If you are still unsure as to whether you are still at risk then please don’t hesitate to get in touch with us. We can help you to distinguish your working practices between your different types of workers and employees and put in place legally compliant contracts and systems to minimise the risk to your business.
What does this cost?
We will agree a fixed cost for this work with you, depending on how much we need to do. In some cases we can offer you free guidance. For our Watertight HR & Legal clients some of this work may be included in your fees so please ask. If you are not a Watertight client and would like a quote, click here.
Contact us on firstname.lastname@example.org or 0114 3032300.