I was just putting the finishing touches to my Brexit tax blog and a look at what makes vehicles commercial in the eyes of the HMRC, however when Pimlico Plumbers and that poor Mr Smith jumped off the page, it has forced me to put out a few words. So, you are going to have to wait for next month for the tax stuff. Here goes…
Self-employed plumber Gary Smith won a legal battle against Pimlico Plumbers as the Supreme Court ruled that he was entitled to workers’ rights. Mr Smith was responsible for his own self-employed tax and earnt a few quid, (so no minimum wage issues there) and was VAT-registered.
However, the nature of his relationship with Pimlico Plumbers was, (they felt) an employer-worker relationship according to the ruling. Gary Smith used their branded van and was obligated to wear a Pimlico uniform. Smith also seemed to be working set very formalised controlling work patterns. So, the judges saw this as Pimlico Plumbers having considerable control over Mr Smith’s working life. They concluded therefore that Smith was simply not a sub-contractor.
As far as the judgement is concerned, the status of ‘worker’ entitles Mr Smith to rights, such as paid holiday, statutory rest breaks and sickness rights.
The case received a lot of media attention, although the jury is still out as to how much of an impact this will have on similar operators in the so called ‘gig economy’, I think they mean our industry funnily enough even though we have been around way before the ‘gig’ label.
However, as we all know the decision may prompt subbies up and down the country to look at their status and consider whether they might have a claim for previously unpaid holiday leave. I hear the lawyers slavering as we speak…
However, there is light at the end of the tunnel. The Pimlico contract in my opinion was not a strong contract for the purposes of status. There are also many issues with how strongly control was exerted both in writing and by working practice specifically in this case.
Let’s be clear, workers are entitled to a contract which, by the way, (although I wouldn’t advise it) doesn’t have to be a written document: the worker agrees to do work or provide a service in return for a reward. The important thing is that the relationship between the two parties matches up with the contract. Simply stating that someone is ‘self-employed’ in their contract or calling your drivers or contractors ‘self-employed’ in conversation doesn’t make a lot of difference if that’s not the reality of the arrangement on the ground.
So, what does this mean for the future? If you were faced with such a case, what would it mean for your business? Well you know there will be legal bills, nothing we can do about that, although there are some firms out there offering insurance against it, but in any case, there would still be a time-consuming court case.
If the status of ‘employee’ was awarded by the courts you can be sure that HMRC would muscle its way to the front of the queue, for back NI. Also, you can’t stop a driver either genuinely or spuriously bringing a case against an operator.
This fight isn’t over, the war isn’t lost. The legislation isn’t here yet, but cases like this make governments feel the need to act. New law needs consultation and the wheels of ground transport need to keep turning. We need to look at fair and decent working practices, but status isn’t the only issue in this industry. I wonder how the other plumbers contracting to Pimlico would feel if they were obligated to be employed directly. I think we all know the answer. We aren’t the only industry caught up in this. The construction industry has danced around this for years and let’s look at the reality of the public sector off-payroll (IR35) rules. The government asked for public authorities to take responsibility for deciding whether an outside contractor or company was paying the right National Insurance. What happened? Instead of these authorities employing everyone, short term contract employment structures called ‘umbrella’ companies swooped in and engaged workers, on their behalf. Commerce will always find a way.
Just remember my favourite old caveat please. All of this is my opinion, please take professional advice, every driver and every operator in my experience is very different in their set up and approach. Be safe on the roads.