A recent case involving a self-employed worker has shed light on how a person’s employment status is defined.
Self-employed plumber Gary Smith brought the case against Pimlico Plumbers when he was dismissed after suffering a heart attack in 2010. Following the attack, Mr Smith requested that his five-day week be cut down to three, but the firm refused, taking away his hired Pimlico Plumbers van and terminating his employment. In response, Mr Smith sued the company, arguing that he was entitled to basic workers’ rights, such as entitlement to sick pay, despite being self-employed. But the firm held the view that he was an independent contractor and had no such rights.
The case was taken to the Court of Appeal.
The main issue of the case was the lack of clarity over whether Mr Smith was a self-employed contractor or a worker. The Court ruled that, even though he paid tax on a self-employed basis, Mr Smith qualified as a worker because he wore the company’s uniform, drove the company’s vehicles, worked a minimum of 40 hours a week, and worked exclusively for the company for six years. He was therefore entitled to the rights.
The Court of Appeal is the highest court to consider such a case, and it’s thought that the outcome could lead to a change in rules regarding the rights of workers who operate in the gig economy. Companies who rely on self-employed workers, such as Uber and Deliveroo, have also been involved in disputes with their workers over their employment status and what rights they’re entitled to.
The founder of Pimlico Plumbers, Charlie Mullins, has said he is “happy this gives some clarity” to who can be considered a worker. He added that Pimlico Plumbers have already changed the contracts with people working for the firm on a self-employed basis so that they’re “watertight”.
In order to make sure the employment rules keep up to date with the current gig economy, the government has commissioned an independent review into modern working practices. The review will be led by Matthew Taylor, the chief executive of the Royal Society for the Arts, and will address questions of job security, pensions, holiday, and parental leave rights.
The case also raises an interesting point about employers’ liability insurance, as confusion over a person’s employment status can also make a business’s insurance requirements unclear. You likely already know that this crucial type of cover is a legal requirement for any company that has one or more employees working for it. However, does it need to cover workers who are self-employed?
It’s slightly more of a grey area, but it’s very likely that workers who are self-employed for tax purposes still need to be covered by employers’ liability insurance and therefore able to make a claim if they’re injured on the job.
According to the HSE’s guide on the Employers’ Liability (Compulsory Insurance) Act 1969, whether or not someone is considered an employee for the purpose of liability insurance will depend on the nature of their relationship with their employer.
As a general guideline, if you control where and when someone works and how they carry the work out, supply them with their tools and equipment, and require them to complete the same work under the same conditions as other workers whom you consider employees, then that person should be covered by employers’ liability insurance.
If, however, you have no control over the person’s working environment, they supply most of the equipment and tools themselves, and they do not work exclusively for you, then the liability insurance may not need to cover them.
Remember, if you’re unsure whether employer’s liability insurance is a necessity for your business, give the insurance experts at Tredstone a call on 0800 2315 162.
And for a cost-effective quote on plumber’s business insurance – or any other type of tradesman business insurance for that matter – get a quote with Tredstone today.