The Supreme Court dismissed Pimlico Plumbers’ appeal and held that the employment tribunal was entitled to find that Mr Smith was a “limb (b) worker”. His claims for unlawful deductions, unpaid statutory leave and disability discrimination may therefore proceed, although he was not an employee and cannot pursue unfair dismissal.
Between August 2005 and April 2011 Mr Smith, a plumbing and heating engineer, did work for Pimlico Plumbers Ltd, a substantial London plumbing business owned by Mr Mullins. In August 2011 he brought employment tribunal proceedings. He alleged that he was an employee under a contract of service and had been unfairly dismissed; alternatively, that he was a worker and had suffered an unlawful deduction from wages and a failure to pay for statutory annual leave; and that he was in Pimlico’s employment and had been discriminated against by reference to disability, including a failure to make reasonable adjustments.
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The threshold decisions
The tribunal held that Mr Smith was not an employee under a contract of service. The Employment Appeal Tribunal dismissed his cross-appeal, and he did not challenge that conclusion further. His unfair-dismissal complaint therefore cannot proceed. The tribunal did, however, decide that he was a worker under section 230(3) of the Employment Rights Act 1996 and regulation 2(1) of the Working Time Regulations 1998, and that he was in employment under section 83(2)(a) of the Equality Act 2010. Those decisions would allow his remaining complaints to go forward. The Employment Appeal Tribunal and the Court of Appeal upheld them. Pimlico asked the Supreme Court to set them aside for inadequate reasoning and to remit the issues.
Lord Wilson, with whom Lady Hale, Lord Hughes, Lady Black and Lord Lloyd-Jones agreed, treated the three surviving threshold decisions as standing or falling together. A limb (b) worker is someone who works under a contract to perform work or services personally for another party whose status is not that of a client or customer of a profession or business carried on by the individual. Although the Equality Act uses different wording, earlier authority had equated the relevant concepts, and the court was not invited to revisit that equation.
The contractual arrangements
Mr Smith made written agreements in 2005 and 2009, the later agreement replacing the earlier one; nobody suggested that they had different consequences for these proceedings. A company manual was incorporated. The documents were puzzling and, as the appeal tribunal had observed, appeared carefully arranged to present operatives as part of Pimlico’s workforce while also describing them as self-employed, all while preserving substantial control.
The agreements described Mr Smith as independent and let him decline particular jobs. They also regulated his availability, appearance and payment. He supplied tools, accounted for his own tax and bore some financial risk. Pimlico’s manual required its brand, identity card and procedures to be used.
Personal performance
A limb (b) worker must undertake to perform the work personally. The contract gave Mr Smith no express right to appoint a substitute. Assistance from an apprentice or mate, or bringing in a specialist while he continued the basic work, was not substitution. The tribunal found only a limited facility: if he had quoted for work and a more lucrative job later arose, he could arrange for another Pimlico operative to do it. There was no unfettered right to substitute at will. The Supreme Court assumed, without deciding, that this facility was contractual rather than a mere informal concession.
That limited right did not negative personal performance. The tribunal was entitled to regard it as a means of distributing work among operatives, akin to swapping shifts. The contractual terms were directed to Mr Smith personally, including warranties about his skills and competence and requirements about his appearance, uniform and identity card. Pimlico’s attempt to treat those requirements as applying equally to any substitute stretched their meaning. Even if substitution was a contractual right, the substitute had to be another Pimlico operative bound by the same heavy obligations. The dominant feature remained personal performance, and the tribunal was entitled to find the necessary obligation.
Whether Pimlico was a client or customer
The remaining question was whether Pimlico’s status was that of a client or customer of Mr Smith. Despite apparently inconsistent provisions, the tribunal legitimately reconciled them. Pimlico had no obligation to provide work on a day when there was not enough work, but if work was available it was obliged to offer it. Mr Smith was in principle obliged to keep himself available for up to 40 hours across five days, without prejudice to declining a particular assignment, for example because of its location. There was therefore an umbrella contract, and the court did not need to decide what the absence of obligations between assignments would have meant.
Mr Smith presented himself as self-employed for tax and VAT, bought materials and could make a profit on them. Pimlico also relied on the right to decline assignments, the scope for outside work and the financial risk of being paid only when its customer paid.
Other features strongly pointed the other way. Pimlico required him to wear its branded uniform, drive its branded and tracked van, carry its identity card, and follow its control room’s administrative instructions. The severe payment terms showed a grip on his economy inconsistent with true independence. The contract also used the language of wages, gross misconduct and dismissal, and imposed restrictive covenants after termination. There is no single test, but the tribunal was entitled, by a reasonable margin, to conclude that Pimlico was not Mr Smith’s client or customer. Pimlico’s complaint that relevant factors had not been addressed was without substance.
Verdict: The Court unanimously dismissed Pimlico’s appeal. The tribunal was entitled to find that Mr Smith was a worker, so the wage, holiday pay and disability discrimination claims could proceed. The earlier finding that he was not an employee for unfair dismissal stood.
Source: Pimlico Plumbers Ltd and another v Smith [2018] UKSC 29
