On 13 June, the Supreme Court handed down its judgment in Pimlico Plumbers v Smith. As many expected, it upheld the Court of Appeal’s decision that Mr Smith, a plumber with Pimlico Plumbers, was a ‘worker’ entitled to certain rights and protections under UK employment legislation. The decision focused on two points:
This judgment is one of a series of recent, well-publicised judgments on employment status, but the first to reach the Supreme Court. As has been the case with the other employment status cases, the judgment is very fact-specific and should not directly result in a flood of claims being brought by employees with a similar fact pattern. The judgment does not add too much new thinking to the Court of Appeal decision but preserves the helpful points that the Court of Appeal made on the right of substitution and how the inclusion of a right of substitution in a services contract might affect the status of the individual concerned:
Employment status tests
The way in which the UK defines an individual as ‘employee’, ‘worker’ and ‘self-employed’ is under scrutiny. The government’s Employment Status Consultation paper (published in February and which closed on 1 June) asks numerous questions, including whether the employment status definitions should be codified in legislation and to what extent personal service should be the essential component to a finding of worker status. It is not clear when we can expect a government response to the consultation response – given the continuing Brexit negotiations it may be some time. If, when the response does come, it recommends legislation, there will be another consultation on the wording of the legislation – we expect that any legislative change in this area is well over a year away.
Holiday pay claims
One of the claims made by Mr Smith was for unpaid holiday pay to which he would have been entitled as a worker. Following a recent judgment, the miscategorisation of individuals as ‘self-employed’ when they are actually ‘workers’ could result in very significant costs for businesses if the miscategorisation went on for a number of years and they denied those individuals paid holiday during that time. In November 2017, the European Court of Justice (in King v The Sash Windows Workshop) held that a worker who has been wrongly categorised as self-employed and, on that basis has not been given paid holiday, may back claim for holiday pay in respect of any four weeks’ ‘EU’ holiday which they did not take during the time they were classified as self-employed and that this type of claim is unlimited in time. For our blog post on this judgment, please see here.
This ECJ judgment only relates to EU holiday which was not taken, however, not to EU holiday which was taken but unpaid. In order to claim for taken but unpaid holiday an individual would usually need to claim for a series of unlawful deductions from wages, and the look back period for these types of claims is subject to a two year cap (introduced in 2014). This cap did not apply to Mr Smith as he brought his claim before the cap came into force. The Sash Windows Workshop case has now been sent back to the Court of Appeal for judgment and will be heard in November 2018. When it does, the Court of Appeal may well comment on how lawful the two year cap is. If the cap is found to be unlawful on the grounds that it is inconsistent with EU law (and there are murmurings amongst commentators that this is a possibility), then a deluge, not a flood, of claims would follow.
June 13, 2018
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