Pimlico Plumbers Ltd & Anor v Smith [2018] UKSC 29

Mr Smith, a plumber engaged by Pimlico Plumbers under contracts labelling him self-employed, brought claims for unfair dismissal, unlawful deductions, holiday pay and disability discrimination. The Supreme Court held he was a ‘limb (b) worker’, allowing his statutory claims to proceed.

Facts

Mr Smith worked as a plumbing and heating engineer for Pimlico Plumbers Ltd between August 2005 and April 2011 under two written agreements (dated 2005 and 2009) which described him as a self-employed contractor. He accounted for his own income tax and VAT, provided his own tools and materials, bore certain financial risks, and earned substantial annual profits. However, he was required to wear a Pimlico branded uniform, drive a Pimlico branded and tracked van, carry a company ID card, follow instructions from the control room, and work a minimum of 40 hours over five days per week. After his engagement ended, he brought claims in the employment tribunal alleging he had been an employee, or alternatively a ‘worker’ under section 230(3) of the Employment Rights Act 1996, regulation 2(1) of the Working Time Regulations 1998, and in ’employment’ within section 83(2)(a) of the Equality Act 2010.

The tribunal held he was not an employee under a contract of service (a finding not further challenged), but was a limb (b) worker for the purposes of all three statutory definitions. The Employment Appeal Tribunal and Court of Appeal upheld that conclusion. Pimlico appealed to the Supreme Court.

Issues

The Supreme Court considered whether the tribunal was entitled to conclude that:

• Mr Smith had undertaken to perform his work or services personally, notwithstanding a limited ability to substitute another Pimlico operative; and
• Pimlico’s status under the contract was not that of a client or customer of a business undertaking carried on by Mr Smith.

Lord Wilson proceeded on the basis (following Bates van Winkelhof v Clyde & Co LLP) that the three statutory definitions effectively stood or fell together.

Arguments

Pimlico

Pimlico submitted that Mr Smith had a right to substitute another plumber to do his work, which was inconsistent with personal performance; that it was merely a client or customer of a plumbing business run by Mr Smith on his own account; that Mr Smith was free to reject work, take outside work, was not supervised as to how he did the work, and bore genuine financial risks; and that the tribunal’s reasoning was inadequate or confused and should be set aside.

Mr Smith

Mr Smith argued that the dominant feature of his contract was personal performance, that any right of substitution was confined to other Pimlico operatives bound by identical obligations, and that the extent of Pimlico’s control over him — branded uniform, branded and tracked van, ID card, control room instructions and restrictive covenants — was inconsistent with Pimlico being a client or customer of his business.

Judgment

The Supreme Court unanimously dismissed Pimlico’s appeal.

Personal performance

Lord Wilson reviewed the authorities, including Express & Echo Publications Ltd v Tanton, Ready Mixed Concrete (South East) Ltd v Minister of Pensions, Mirror Group Newspapers Ltd v Gunning, James v Redcats (Brands) Ltd and Hashwani v Jivraj. He held that although personal performance is the sole test, it may be helpful to assess the significance of a right of substitution by reference to whether the dominant feature of the contract remained personal performance. The contractual terms were clearly directed at Mr Smith personally, referring to ‘your skills’, requiring warranties of competence, ‘a high standard of conduct and appearance’, that ‘your appearance must be clean and smart’ and that ‘your ID card must be carried when working for the Company’. The right of substitution was confined to another Pimlico operative — someone bound by identical obligations — and was therefore akin to the swapping of shifts within a workforce rather than genuine delegation. Decisions such as Halawi v WDFG UK Ltd, relied on by Pimlico, were distinguishable because Mrs Halawi had no contract with the alleged employer at all. The tribunal was entitled to find that the dominant feature of the contract was personal performance.

Client or customer

Lord Wilson observed that the exclusion of those with the status of client or customer is clumsily worded. He referred to Cotswold Developments Construction Ltd v Williams, Hashwani v Jivraj, and the CJEU’s decision in FNV Kunsten, noting that indicators of subordination, integration into the principal’s operations, and lack of independent marketing to the world in general are relevant but that there is no single key.

The tribunal legitimately found an umbrella contract: although one clause stated Pimlico was not obliged to offer work nor Mr Smith to accept it, the manual required a minimum 40-hour working week, and the tribunal reconciled these by finding Pimlico had to offer work if available, and Mr Smith had to keep himself available. Features pointing away from Pimlico being a client or customer included the branded uniform, branded tracked van, ID card, close control by the control room, strict payment terms giving Pimlico a grip on Mr Smith’s economy, references in the contract to ‘wages’, ‘gross misconduct’ and ‘dismissal’, and post-termination restrictive covenants. Although Mr Smith was registered as self-employed and bore some financial risk, the tribunal was entitled ‘by a reasonable margin’ to conclude Pimlico was not a client or customer of his business. The complaint that the tribunal’s reasoning was inadequate was rejected.

Implications

The decision confirms that a limited right to substitute — particularly one confined to others bound to the same principal under identical obligations — does not necessarily negate the obligation of personal performance required for limb (b) worker status. Where the dominant feature of the contract is personal performance, a narrow right of substitution akin to shift-swapping will not defeat worker status.

The judgment also illustrates how tribunals should assess whether the other contracting party is a ‘client or customer’: by examining the overall degree of control, integration, and subordination, including branding, uniform, vehicle tracking, payment terms, and restrictive covenants, rather than focusing narrowly on tax status or the label the parties have chosen. Self-employment for tax purposes is not determinative.

The case is significant for the growing population of individuals engaged on contracts purporting to establish self-employment while in reality operating under substantial control and integration within another’s business. It clarifies that such individuals may qualify for statutory protections relating to unlawful deductions from wages, paid annual leave, and discrimination, even where they are not employees under a contract of service. The Supreme Court’s approach is cautious and fact-sensitive: it does not lay down a bright-line rule but confirms that appellate courts should not lightly disturb tribunal findings on worker status that are reasonably open on the evidence. Issues such as whether absence of obligations between assignments indicates a lack of subordination (per Windle) were left for future determination.

Verdict: Pimlico’s appeal was dismissed. The Supreme Court upheld the tribunal’s decision that Mr Smith was a ‘worker’ within the meaning of section 230(3) of the Employment Rights Act 1996, regulation 2(1) of the Working Time Regulations 1998, and in ’employment’ within section 83(2)(a) of the Equality Act 2010. His substantive claims may proceed to be heard in the tribunal.

Source: Pimlico Plumbers Ltd & Anor v Smith [2018] UKSC 29