Between August 2005 and April 2011 Mr Smith, who is by trade a plumbing and heating engineer, performed work for Pimlico Plumbers Ltd. When his contract was terminated he issued various employment tribunal claims, alleging he had been entitled to wages and holiday pay, amongst other things.

Mr Smith argued he was a 'worker' under S.230(3)(b) of the Employment Rights Act 1996 (the equivalent of Article 3 (3)(b) of the Employment Rights (NI) Order 1996 in this jurisdiction) i.e. he was an individual who worked under any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

So, two tests applied in Mr Smith's case - he had to establish that he undertook the work personally and that Pimlico Plumbers was not either a client or customer. He had succeeded on these points at the employment tribunal, EAT and Court of Appeal.

The Supreme Court also found in his favour and did so largely by analysing the employment judges findings. The Court found that Mr Smith was obliged to personally undertake the work required of him by Pimlico Plumbers. He had a limited right of substitution by prior arrangement with the company and could ask another Pimlico plumber to undertake the work. The UKSC found that 'the two terms appear to be inconsistent, unless they can be reconciled on the basis that Pimlico’s prior consent would always be necessary but would not be given unless the assignee of the duties were to be another Pimlico operative.

The two new terms led the judge to comment: “In my view this clarifies that [Mr Smith] was contracted to provide work personally with, at most, only a limited power to substitute either to other internal operatives or with the prior consent of [Pimlico].” The judge concluded that the right to substitute another Pimlico operative did not negative Mr Smith’s obligation of personal performance. She held that it was a means of work distribution between the operatives and akin to the swapping of shifts within a workforce.

On the second point, as to whether Pimlico Plumbers was a client, the UKSC also concluded that the employment judge had reached the right decision. Although there were references to Mr Smith not being obliged to accept work, the manual stated, “Normal Working Hours consist of a five day week, in which you should complete a minimum of 40 hours.” Further references were made to payment and wages - not things associated with self-employed contractors. Further, Mr Smith wore a Pimlico Plumbers' uniform and drove one of their vans.

The case highlights the tricky balancing act that takes place in a number of cases, including several 'gig economy' cases, when it comes to establishing worker/employee status. The UKSC recognised that not everything pointed to Mr Smith being a worker:

"There were financial risks, as well as advantages, consequent upon Mr Smith’s work for Pimlico. He was bound by the estimate for the price of the work which he had given to the client. Pimlico did not pay him, not even for any materials which he had supplied, until the client had paid it; if a client paid more than one month late, its payment to him was halved; and, if a client failed to pay within six months, it paid him nothing, not even for his materials, and irrespective of whether the client made payment thereafter. If a client complained about his work, even about work done by another Pimlico operative whom he had substituted to do it, it was Mr Smith who was responsible for remedying it and who received no payment referable to it until he had done so."

However, the balance of factors pointed to Mr Smith being a worker:

"On the other hand, there were features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor. The contract made references to “wages”, “gross misconduct” and “dismissal”. Were these terms ill-considered lapses which shed light on its true nature? And then there was a suite of covenants restrictive of his working activities following termination."

UKSC Decision:
http://www.bailii.org/uk/cases/UKSC/2018/29.html

You may watch the Supreme Court's summary presentation on YouTube:
https://www.youtube.com/watch?v=NI4TKa6th7s

This case has caused quite a stir in employment law and HR circles. The Law Society Gazette says that solicitors are split on future of ‘gig economy’:
https://www.lawgazette.co.uk/news/pimlico-solicitors-split-on-future-of-gig-economy/5066506.article

Pinsent Masons think that contractors may be entitled to pensions after the Pimlico decision:
https://www.out-law.com/en/articles/2018/june/contractors-pensions-entitlement-pimlico-decision/

The owner of Pimlico Plumbers was not happy after the decision:
https://news.sky.com/story/plumbing-firm-boss-hits-out-after-losing-landmark-employment-rights-case-11404057

And he continued to be unhappy, perhaps with some justification - Mr Smith apparently earner £0.5m over three years and, according to the owner, was also happy to receive the tax breaks associated with self-employment until his health deteriorated:
https://realbusiness.co.uk/law/2018/06/18/charlie-mullins-opens-up-about-self-employment-contractor-court-ruling/

A review of the subsequent holiday pay claim in this case by the Claimant, Mr Smith is available here:
https://www.legal-island.com/articles/uk/case-law/2021/march/smith-v-pimlico-plumbers-ltd-2021/