A spanner in the works

Mr Charlie Mullins, chief honcho of Pimlico Plumbers Ltd, is a tad put out with one of his plumbers, Mr Gary Smith. I say “his” plumbers because Mullins’ firm presented its 125 plumbers to customers as very much their own. Smart uniforms, smart vans, strict time-keeping, and – if anyone asked – the teams of fitters were all held out to be an integral part of Pimlico’s workforce. The first judge in the dispute between plumber Smith and boss Mullins said that “contrary to appearances, its operatives were in business on their own account. Pimlico Plumbers arranged a carefully choreographed set of procedures and contractual documents designed to negate the appearance given to the public at large and its customers to not present its operatives as self-employed, in business, on their own account.” Mullins thus resembled the Roman god Janus – god of gates and doorways, with two faces looking in opposite directions.

After working for Pimlico Plumbers for six years, Gary Smith had a near-miss heart attack.  Because of that, he says, he was unfairly and wrongfully dismissed – and made a claim, as might an employee. For good measure, he also claimed for entitlement to pay during his period of medical lay-off, disability discrimination, holiday pay and “unauthorised deductions”. Charlie Mullins doesn’t come over as a pushover:  he pushed back. Solicitors got their mole-grips and stillsons out of their lawyers’ tool-box.  So too eventually did the Employment Tribunal. The judge decided Smith was a “worker” but that that didn’t mean he was an employee – nor did it mean he was working for Pimlico Plumbers as an independent contractor. Lawyers talk of contracts of service and contracts for service, but there is an intermediate category for those falling between those two categories: he was a “worker”.  He could not claim for unfair dismissal, nor wrongful dismissal, nor entitlement to pay during the period of medical lay-off. But he could complain about direct disability discrimination and in respect of holiday pay as well as unauthorised deductions from wages. That was the result in April 2012. Mullins and Smith were now toe-to-toe. Four judges later, they arrived at the judge in the Employment Appeal Tribunal.  Pimlico Plumbers lost. But it didn’t give up – and then lost again in front of three judges in the Court of Appeal. And lo, Pimlico Plumbers came in June all the way to five judges in the highest court in the land … and lost again.

“Can you see how, despite being self-employed, he is characterised as a ‘worker’? He is part and parcel of the services being performed by Pimlico Plumbers” 

 

So, we have this “intermediate” category of working people falling between employee under a “contract of service” and those who work for others as independent contractors. How come?  Firstly, why was Gary Smith not an employee?  After all, his outward appearance as portrayed by Pimlico Plumbers to the customers was as every inch an employee; he dared not say otherwise.  Ah, but his inward relationship via a contractual agreement with Pimlico was every inch not.  

The Supreme Court said that the contract documents were “carefully choreographed” to serve these inconsistent objectives. They expressly said to Gary Smith and his co-plumbers: “You are an independent contractor in business on your own account”; “nothing will render you an employee, agent or partner of Pimlico Plumbers”. That’s a good starter for ten.  It added: “Termination of this agreement shall not constitute a dismissal for any purposes” and “You will account for your income tax, VAT, social security contributions”, continuing: “You will be paid 50% of the amount charged to the client in relation to labour content only.” Then (ouch) it added “provided that the company shall have received clear funds from the client” and: “If an invoice remains unpaid (by the client) for more than one month, the fee payable to you will be reduced by 50%,” continuing: “If an invoice remains unpaid for more than six months, you will not receive a fee for the work” and: “No payment will be made to you unless the customer is completely satisfied.” Then: “Any claim made against the company as a result of the operative’s incompetence or negligence will be passed to the operative and his insurers.” The documents also said that the Pimlico Plumbers van would be rented to the plumber at £120+VAT per month, payable in advance, and finally, “You can’t sublet the work to others.”  Okay: Gary Smith is whistling in the wind to claim he is an employee.

But can you see how, despite being self-employed, he is characterised as a “worker”? He is part and parcel of the services being performed by Pimlico Plumbers to Mrs Upper-Crust in Chelsea. And the law, going back to 1875, is sniffy about such things as withholding or docking wages. So Gary Smith has these various “workers” claims open to him. The gap between employee and self-employed is where an “individual undertakes to perform personally any works or services for another party to the contract whose status is not by virtue of the contract that of client or customer of any profession or business undertaking carried on by the individual”. The gap allows him to claim unlawful deductions from his wages, annual leave, and disability payments. “Mind the gap!” said the plumber to Mr Charlie Mullins.