Pimlico Plumbers and Another v Smith
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton MR,Lord Justice Davis,Lord Justice Underhill |
| Judgment Date | 10 February 2017 |
| Neutral Citation | [2017] EWCA Civ 51 |
| Docket Number | Case No: A2/2015/0196 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 February 2017 |
[2017] EWCA Civ 51
Sir Terence Etherton, MR
Lord Justice Davis
and
Lord Justice Underhill
Case No: A2/2015/0196
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
HIS HONOUR JUDGE SEROTA QC
UKEAT049512DM
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas Linden QC and Akash Nawbatt (instructed by Mischon de Reya) for the Appellants
Karon Monaghan QC and David Stephenson (instructed by TMP Solicitors) for the Respondent
Hearing dates: 17 & 18 January 2017
Approved Judgment
The question on this appeal is whether the Employment Tribunal (Employment Judge Corrigan) ("the ET") was correct to hold in a decision dated 16 April 2012 that the respondent, Gary Smith, was a worker within the meaning of section 230(3)(b) of the Employment Rights Act 1996 ("the ERA") and regulation 2(1) of the Working Time Regulations 1998 ("the WTR") and his working situation fell within the definition of "employment" in section 83(2)(a) of the Equality Act 2010 ("the EA") during the period that he worked for the first appellant, Pimlico Plumbers Limited ("PP").
The Employment Appeal Tribunal (HH Judge Serota QC) ("the EAT") in a decision dated 21 November 2014 upheld the decision of the ET.
The case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker.
The background facts
Mr Smith is a plumber. He carried out plumbing work for PP between 25 August 2005 and 28 April 2011. He claims that, following a heart attack in January 2011, he was unfairly or wrongfully dismissed on 3 May 2011.
PP is a plumbing and maintenance company. The second appellant, Charlie Mullins, is its founder and owner. At the time of the ET's decision it had 75 office staff and 125 people, like Mr Smith, carrying out plumbing and maintenance work on its behalf.
The 2005 Agreement
Mr Smith signed an agreement with PP on 25 August 2005 ("the 2005 Agreement"). It was in PP's standard form but with blanks completed in manuscript. The agreement, as completed in manuscript, described PP as "The Company" and Mr Smith as the "sub contracted employee".
Above Mr Smith's signature, it stated:
"The terms of your agreement are detailed in the Company Procedures and Working Practice Manual which you must read and agree to comply with before signing.
I agree to the terms of conditions as laid out in the Company's Procedures and Working Practice Manual and accept that this forms part of my agreement with the Company".
The Manual
The Company Procedures and Working Practice Manual ("the Manual") contained the following relevant provisions.
There were provisions governing personal appearance. It said:
"After performance you and the Company are judged on your appearance which must be clean and smart at all times…The Company logo'ed uniform must always be clean and worn at all times."
Under the heading "Working times", the Manual provided:
"Normal Working Hours consist of a 5 day week, in which you should complete a minimum of 40 hours. …
Adequate notice must be given to Control Room for any annual leave required, time off or period of unavailability. Any leave or time off must be taken in full days."
Under the heading "On-Call Rota" there was a provision that:
"Operatives must always be available during their shift to take on-call work".
Under the heading "Operatives Telephone Procedure", there was provision for operatives to telephone the control room fairly frequently and for all customer contact, appointments and scheduling to be made through the control room.
There were detailed requirements as to timesheet procedures, invoice procedures, estimate procedures and additional labour charges.
Under the heading "Unpaid Invoices", it was provided:
"No payment will be made to the Operative until payment in full has been received by the office. If any payment fails to be honoured a deduction will be made from the Operative who has already been paid.
A 50% deduction will be made from the Operative's percentage if payment is received by the office later than 1 month from the job date.
Invoices which remain unpaid after six months from the date of the job will be written off."
There was provision for every operative to be issued with a PP I.D. card, which had to be carried when working for PP, and for the supply of "complete logo'ed uniforms of various combinations" and the issue of a mobile telephone. The operative could select the preferred tariff. The Manual provided that mobile telephone charges plus VAT "will be deducted from wages on a monthly basis".
There were provisions relating to collecting and purchasing materials. The operative was required to collect and order the materials for jobs and charge the customer at cost plus 20% trade mark-up plus VAT.
Under the heading "Private Work" it was provided that:
"Any individual undertaking private work for or as a result of contacts gained during your working week and contravening the signed contract will be dismissed immediately and may be subject to legal action by the Company.
Any Operative using information gained while working for the Company for anything other than the Company's benefit will be prosecuted."
Under the heading "Termination of Contract", it was provided that:
"Operatives who fail to observe the rules outlined in this working practice manual in respect of procedures or conduct, will be given a warning and may thereafter be subject to instant dismissal.
Wherever possible the Company will give reasonable notice of termination of contract. Operatives are required to give reasonable notice of leaving and complete the following formalities: …"
Under the heading "Wages", it was provided that:
"1. Wages will be paid directly into the Operatives designated bank or building society account …
2. Wage slips may be collected at Paying-in or sent by post."
The Manual provided for a standard rate of £120 + VAT for rental changes for PP's vans (which were marked with PP's logo), payable monthly in advance, which "allows Operatives to work on a Self-employed basis".
Under the heading "Working Practices and Customer Relations" it was provided that the operative must follow ten personal conduct guidelines, including arriving punctually, not smoking, not using the customer's telephone or toilet, keeping the customer informed if the operative needed to leave the job for any reason, removing all rubbish and tidying up completely after finishing, keeping all mobile phone calls to a minimum and job related so as not to waste the customer's time and money, and keeping visits to the van to a minimum so as to avoid customer dissatisfaction.
The 2009 Agreement
The 2005 Agreement was replaced by a longer and more detailed agreement in the form of a letter from PP to Mr Smith dated 21 September 2010, which was countersigned by Mr Smith ("the 2009 Agreement"). The date was wrong and should have been 21 September 2009. The title to the body of the letter was: "Agreement — Self-Employed Operative". PP was defined as "the Company."
Sub-paragraph 1.1 provided that the 2009 Agreement would commence on 21 September 2010 and would continue (subject to earlier termination in accordance with other provisions) until terminated by either party giving to the other not less than one week's notice. It is common ground that the commencement date was intended to be 21 September 2009 and the mention of 2010 was a mistake.
Sub-paragraph 1.2 provided for termination by notice in writing in specified circumstances, including if Mr Smith was to:
"commit an act of gross misconduct or do anything which brings or may bring the Company into disrepute or, after notice in writing, wilfully neglect to provide or if you fail to remedy any fault in providing the Services or if, in the Company's opinion, your work is of poor quality or you do not perform the Services to a satisfactory standard."
Sub-paragraph 2.1 provided that Mr Smith was to:
"provide such building trade services as are within your skills and all such ancillary services as are reasonable to the Company and/or its clients in a proper and efficient manner ("the Services") for the duration of this Agreement."
Sub-paragraph 2.2 provided that Mr Smith was to:
"provide the Services for such periods as may be agreed with the Company from time to time. The actual days on which you will provide the Services will be agreed between you and the Company from time to time. For the avoidance of doubt, the Company shall be under no obligation to offer you work and you shall be under no obligation to accept such work from the Company. However, you agree to notify the Company in good time of days on which you will be unavailable for work."
Under sub-paragraph 2.4 Mr Smith warranted and undertook that he was competent to perform the work he agreed to carry out and that he would:
"…promptly correct, free of charge, any errors in your work which are notified to you by the Company or, at the Company's option, repay to the Company the cost of correcting such errors."
Sub-paragraph 2.6 provided as follows:
"You acknowledge that you will represent the Company in the provision of the Services and that a high standard of conduct and appearance is required at all times. While providing the services, you also agree to comply with all reasonable rules and policies of the Company from time to time and as notified...
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