A recent ruling by the UK Supreme Court has seen the TUC call for “a crackdown on bogus self-employment” and an employer warn of a “tsunami of claims.” Who is right? And what implications does the ruling have for you and me?  

By Mark Richards

Cast your mind back to February 2017. At the time England was still qualifying for the World Cup finals – now, lifting the trophy is just a month away. And Theresa May had a healthy majority in the House of Commons – there was absolutely no need to call a General Election and Brexit would surely be sorted out in the very near future.

It was also in February 2017 that I wrote my first article for MoneyGap. It considered a case that had just gone to the Court of Appeal. Pimlico Plumbers versus, Gary Smith, who had worked for them for six years. Here’s what I wrote at the time:

The Court of Appeal has given a ruling which could well have far-reaching implications for freelance contractors and the companies which ‘employ’ them and have implications for employment rights across the UK.

The case in point concerned Gary Smith, a plumber from Kent.

Gary ‘worked’ for a company called Pimlico Plumbers. That is to say, he used one of their branded vans and worked when and where the company told him to work. He was VAT-registered in his own name and paid tax on a self-employed basis – but for six years his only source of income was the work he did for Pimlico Plumbers.

So was Gary self-employed? Or was he really an employee of the company?

That question came to a head in 2010 when – sadly – Gary had a heart attack. He wanted to cut his work down: three days a week instead of the five he had signed up for with the firm. ‘Sorry,’ Pimlico Plumbers said. ‘Won’t do it.’ They took away Gary’s branded van and that was that.

Gary claimed that because Pimlico Plumbers was his only source of income he was effectively employed. He took them to court, claiming that he had been sacked and that he was entitled to basic workers’ rights such as the national minimum wage, paid holidays and the right to bring a claim for discrimination or unfair dismissal.

Pimlico Plumbers fought the claim – all the way to the Court of Appeal – saying that plumbers like Gary were hired on a self-employed basis and provided their own materials. While they did not have workers’ benefits, but they were paid significantly more as a result of that.

The original court found in Gary’s favour: they ruled that plumbers like him were ‘workers.’ They were not employees – but they definitely were not self-employed as they were contracted to Pimlico Plumbers and it was their only source of income. This judgement was upheld in the Court of Appeal.

That wasn’t the end of it…

You would have thought that a ruling by the Court of Appeal would end the matter. No, Pimlico Plumbers took the case to the UK Supreme Court. Goodness knows what a plumber’s call out rate is in Pimlico: the barristers and QCs needed to go to the Supreme Court must have cost a pretty penny – but to no avail. The Supreme Court upheld the decision of the Court of Appeal, ruling that Gary Smith had, in effect, been employed by Pimlico Plumbers.

The company’s reaction

Charlie Mullins, boss of Pimlico Plumbers, was quick to react, saying that he was “disgusted” by the decision.

“This was a poor decision,” he said, “That will potentially leave thousands of companies, employing millions of contractors, wondering if they will one day get a [demand] for money, despite having paid in full years ago.”

The TUC view

Unsurprisingly the TUC took an entirely different view, with general secretary Frances O’Grady citing the ruling as evidence of “how widely sham self-employment has spread.” She called on the government to “crack down on bogus self-employment” and called for the burden of proof to be reversed – so that it was up to companies to prove that workers were genuinely self-employed.

So who’s right?

As usual, the truth lies somewhere in the middle. Last year the Taylor Review into the gig economy concluded that all work in the UK should be “fair and decent” as it looked at the working practices of companies like Deliveroo and Uber. But it very much looks like ‘fair and decent’ is going to be determined by the courts and quite possibly on a case-by-case basis.

While Charlie Mullins warned that the Supreme Court ruling “would lead to a tsunami of claims,” Tim Goodwin of law firm Winckworth Sherwood cautioned that the ruling may not apply to other claims.

“To a degree, the issue of employment status in the gig economy is still up in the air,” he said. “The government is consulting on the issue and may bring forward legislation. So it is quite possible that parliament may overrule this decision.”

So in the short term, it looks like the only winners may be the lawyers. That is obviously good news, as I know many of you lie awake at night worrying that lawyers are not earning enough…

Where does the ruling leave you and me?

Two things are undeniable: modern technology will not suddenly go into reverse. We are not going to throw away our phones and apps and we are not going to stop wanting a pizza delivered or needing an Uber. Equally, the gig economy works for a lot of people – it allows people to control when they work and how much they work.

So the gig economy is not going away. If anything, it is going to continue to grow, with some studies predicting that in the future we may be doing as many as ten jobs at once.

Clearly, this suits employers and does not suit left-wing politicians. That is not to make a political point, but rather to illustrate the fact that the laws on employment within the gig economy may change frequently, depending on which party is in power. If you want to be genuinely self-employed then it makes sense to be able to prove it – to clearly have more than one source of income. If you genuinely want the security of full-time employment then you need to make sure your contract reflects that and provides all the security and benefits that come with it.