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Businesses which generate and pass work to third party individuals to carry out on a 'self-employed' basis, should consider whether they may in fact be 'workers' under UK law and entitled to basic employment law rights, following a Supreme Court ruling.
The Supreme Court has ruled that a plumber purportedly engaged as a self-employed independent contractor, was in fact a worker. This means he can now make a claim against his employer for holiday pay, unlawful deductions from wages, and disability discrimination.
A self-employed independent contractor is not entitled to employment law rights such as the national minimum/living wage, paid annual holidays, rest breaks, maximum weekly working hours and auto-enrolment pension contributions. An employee, however, enjoys full employment rights. A 'worker' is entitled to some of those rights. The legal test of whether an individual is a 'worker' is:
Relevant factors include whether the individual is providing a personal service or can substitute someone else to do their work; whether the employer is a customer of the individual's business; and the degree of control the employer exercises over the individual.
In this case, a plumber worked for a company in circumstances where clients were given the impression he was an employee. However, his paperwork with the company said – and he believed - that he was working for the company as an independent contractor.
However, he had a heart attack and the company stopped giving him work. He claimed unfair dismissal and disability discrimination - which are employment law rights.
One key issue was whether the plumber was obliged to carry out work for the company personally, or could provide a substitute to do it instead.
The Supreme Court found that he did not have an absolute right to provide a substitute at his discretion, and he therefore had to provide a personal service (even though he could substitute another plumber already on the company's book – akin to employees swapping shifts). That meant he was a worker for the purposes of the law - unless the company could show it was a client or customer of his.
Factors indicating he was not a worker included the fact that he could choose which work to accept; he could do outside work if the company did not provide him with any; he carried part of the financial risk arising from his work (he was personally liable for defects, and carried professional indemnity insurance); and he was not supervised. These indicated a relationship of a customer and self-employed contractor.
However, the Supreme Court said these were not enough to override other facts indicating that he was a worker, including that:
Applying these principles, the Court found that the plumber did not have an unfettered right to substitute another worker if he was personally unable or unwilling to fulfil a job request, and the company was neither a client nor a customer. He was, therefore, a 'worker' and entitled to basic employment law protections.
Case ref: Pimlico Plumbers Ltd & Anor v Smith  UKSC 29
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