Jonathan Rennie, employment partner, shares his thoughts on yesterday's Supreme Court judgment (Pimlico Plumbers Ltd v Smith)
The judgment highlights the "regrettable" complexity of this area of employment law but also, and perhaps more importantly, how easy it is for employers to take the wrong approach when trying to address their employment relationships.
Firstly, the court issued a warning shot by reminding employers that they can't expect to cover this issue off in the "careful choreography" of their contracts – the court will look at the reality of the situation and make its decision based on the facts of each case.
In examining the reality, the court took a "checklist" approach, which provides employers with useful guidance as to the features of a working relationship that could be used to determine whether or not someone is a worker or self-employed.
The court also helpfully clarified that when it comes to the degree of 'personal service' as a test for employment, Mr Smith was a worker and not self-employed even though he was allowed to substitute himself for someone else even if he wasn't sick, for example.
Secondly, the fact the Pimlico Plumbers lost its appeal and the risk that decisions against employers could apply to all workers immediately and automatically, should make employers more concerned about reviewing and updating their contracts and working relationships in light of modern working practices and employment law before it is too late.
It is surprising that the Supreme Court didn't offer any further commentary on this area of the law, given the number of high profile cases in the last year, the Taylor Report and its own acknowledgment of the complexity, which leads to more litigation. The variable nature of work means that it doesn't fit neatly into the categories found in the various strands of legislation. As those ways of working continue to expand, pressure for clarity will continue to mount.
If clarity was provided on employer or worker status from day one of starting work then all parties would know their immediate rights and responsibilities and unnecessary disputes would likely be avoided. The six plus years of litigation in this case was to decide a preliminary point only to enable the claimant to raise his main claims, which are yet to follow
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