UPDATE: so the decision is out and it seems to be mainly Option 1 (see below). Lord Wilson’s decision does, I think, move the law on a bit when it comes to the right to send a substitute. When looking at that right it might be appropriate to consider whether personal service is still a ‘dominant feature’ of the relationship. However it remains to be seen whether this would work in a case with a clear and unambiguous substitution clause. On balance the law remains much as we already thought it was.
It is also worth emphasising that this case really has nothing to do with the gig economy. Pimlico Plumbers (however this case eventually turns out) were providing reliable, regular and well-paid work to their plumbers. True gig economy cases tend to turn on whether there is any obligation to provide work at all and this case says very little about that. In the Uber case that will be before the Court of Appeal later this year a key question is whether the drivers are working ‘for’ Uber at all – or whether they are working for each individual passenger. I don’t think anything said in this case is a game-changer when it comes to the gig economy cases currently making their way through the system.
I‘ll have lots more to say on where we now are with employment status in the June edition of the Range of Reasonable Responses Newsletter. You can subscribe to that here.
Tomorrow morning the Supreme Court gives its decision in Pimlico Plumbers v Smith. At issue is whether Mr Smith was ‘in employment’ for the purposes of the Equality Act and a ‘worker’ for the purposes of the right to paid annual leave. The Tribunal, the EAT and the Court of Appeal all said he was both. Were they right?
Now the problem is that I am away at the moment and in a different time zone. When I wake up on Wednesday the decision will have been out for hours and by the time I get back it will be old news. So I thought I would get my opinion on the decision in early despite the slight disadvantage of not having read it. I hope that what follows covers all the bases (go Nats!) and when the decision comes you can just disregard the options that turned out to be wrong!
Option 1: The Supreme Court upholds decision on basis that Tribunal was entitled to find the facts as it did
I knew this would happen. In fact I was surprised that the Supreme Court even agreed to hear this case. Whether or not someone is a worker or an employee is largely a matter of fact for the Tribunal to decide. Once the Tribunal had found that Mr Smith was not running an independent plumbing business and had agreed to work ‘for’ Pimlico Plumbers the result was really inevitable. The employer’s argument that there was no obligation on him to perform the work personally was never going to work. Yes he could get another Pimlico Plumber to cover for him, but that is really just a form of shift swapping – not a right to subcontract the work. Nor was the Supreme Court ever going to be impressed by the suggestion that being able to bring a ‘plumber’s mate’ in to help with the work made a difference to his status.
The disappointing aspect of this decision is that the Court has not moved the law on – or even clarified how it works. But Judges don’t like saying something new if they don’t need to. All of the interesting legal arguments about personal service, mutuality of obligation and the potential difference between being a worker and being covered by the Equality Act were raised on Mr Smith’s side and he didn’t need to win those points to win the case. Pimlico plumbers were really just picking holes in the Tribunal’s findings of fact – and they were never going to get far doing that.
The upshot is that this eagerly awaited case is a bit of a damp squib. Important for Mr Smith, but not a game changer for the rest of us.
Option 2: Smith wins and the Court takes the opportunity to significantly widen the scope of employment status
I had a feeling this might happen. When the Supreme Court gave Pimlico Plumbers permission to appeal on a case that seemed to turn on its facts, I thought that they might have been looking for an opportunity to move the dial on employment status. Just as I suspected, Lady Hale has delivered a decision that cuts through all of the tedious faffing about over the right to send a substitute and made it clear that just because a worker can send a substitute, that does not mean that he or she is free of any obligation to perform work personally. if the parties clearly expect that the work will usually be done by the worker then that is enough. This is a common sense ruling that, funnily enough, echoes one of the key recommendations of the Taylor Review. It would have taken the Government years to get around to doing what the Supreme Court has done with the stroke of a pen.
We should also all be grateful that the Supreme Court has made such a clear ruling on what is meant by ‘mutuality of obligation’ – particularly in the context of worker contracts. frankly the case law was getting really bogged down on this issue so well done to Lady Hale for putting the matter so clearly!
While this was not a case about the gig economy, it will certainly worry gig economy employers. The upshot is that you can no longer bung a substitution clause into a contract and rely on the fact that it will only be used by a small number of workers – and not very often. If I were Deliveroo, I’d be gearing up for another union recognition claim.
Option 3: Pimlico Plumbers wins and the Supreme Court asserts the primacy of the written contract
Just as I thought! I suspected that something was up when the Supreme Court gave Pimlico Plumbers permission to appeal. They had to think that there was a serious point of law being raised by the ’employer’. In this decision the Supreme Court has reasserted that the written contract is the place to go when determining the nature of the relationship between the parties. Looking at ‘what happens in practice’ only gets you so far and the clear terms of a written agreement can only be disregarded when they are shown (as in Autoclenz) to be completely at odds with what was actually intended by the parties at the time the contract was made. The contractual documentation in this case was not as clear as it might have been, but the Tribunal did not pay sufficient attention to it and a new Tribunal will have to look at the issue again.
This case will put pressure on the Government to carry through the reforms suggested in the Taylor review. Until that happens it is clear that gig economy employers will now find it easier to persuade Tribunals that those who work for them are independent contractors with no employment rights.
I think that just about covers it.
My feeling is that the first option is the most likely and that the case will be a bit of an anti-climax. Option 2 would be the best result for the development of the law and is the one I’m rooting for. Perhaps it’s a bit much to hope that they will firmly stamp on the use of substitution clauses and sort out the current mess over mutuality of obligation, but I live in hope. Option 3 would be a victory for legal formalism over common sense and leave tens of thousands of workers without legal protection because of some obscure paragraphs inserted into a contract that they have probably never read, much less negotiated. I doubt the Supreme Court will want to do that, but you can never really tell until the decision is out.
Of course knowing my luck the decision will be some sort of hybrid of two or more of these options or some fourth option I haven’t thought of. When that happens I will take some comfort from having predicted that too.