When is a contractor an employee?
When is a contractor an employee?

When is a contractor an employee?

When is a contractor an employee?

The Court of Appeal has dismissed an appeal by Pimlico Plumbers against an employment tribunal’s judgement that plumber Gary Smith is a worker rather than self-employed, meaning he was entitled to workers’ rights such as holiday pay.

These type of contractual arrangements are being increasingly tested in courts and tribunals and in the recent Uber and CitySprint cases, dealing with taxi drivers and bicycle couriers respectively, have shown the courts are not fooled by contractual arrangements which assert self-employed status but which do not reflect the reality of the working relationship.

Under section 230 of the Employment Rights Act 1996, a worker is an individual who has entered into or works under a contract of employment or any other contract whereby the individual undertakes to do or personally perform 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.

The Pimlico Plumbers Case

In the Pimlico case, Mr Smith had some flexibility over the hours he worked, and was treated as self-employed for tax purposes but he was required to: wear a company uniform, drive a van with Pimlico Plumbers’ logo on the side, work a five-day week of at least 40 hours, liaise with Pimlico Plumbers about time off; provide work personally for Pimlico Plumbers; and was unable to work elsewhere – all of which suggested that he was not in business on his own account.

Pimlico Plumbers said: “Gary Smith was a self-employed contractor carrying out work for Pimlico Plumbers for about six years, and during that time was very happy to take advantage of all the tax benefits of being self-employed, including being VAT registered, paying low corporation tax rate on his earnings, and claiming tax relief on such things as office space and employing his wife. Mr Smith was also not paying tax on a PAYE basis at 45p in the pound, which is one of the major features of the ‘worker’ status.”

Read more on the Pimlico Plumbers case here.

The moral of the story? 

Although someone may be described as self-employed, the label is irrelevant. After all, a spoon doesn’t become a fork just by calling it a fork. It is still a spoon.

Is your business at risk? 

At PlusHR, we advise our clients on all aspects of employment law, including the Employment Rights Act 1996. If you are confused by terms such as ‘mutuality of obligation’ or don’t understand the ‘control test’, let us help you to minimise the risks associated with using contractors and mitigate against claims such as the ones described above. Our fully CIPD qualified HR Managers are on hand get in touch now by calling +44 (0)20 3751 4422 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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