The Practical Lawyer


Self-employed – or worker?

The Pimlico Plumbers case was seen as a victory for workers in the gig economy, with the Supreme Court looking at the reality of the relationship (rather than the legal labels attached). So, what happens on the ground is more important than the wording of the contract.

A note in the Gazette highlights two lessons that come from the Supreme Court decision:

  • Right of substitution: a right of substitution is not incompatible with being a ’worker’ (although it does undermine the concept that it is a contract for the services of an individual). Although there was not a straightforward right of substitution in the Pimlico Plumbers contract there was a right to appoint another Pimlico Plumbers operative to do the job (ie a very small pool of people). But that limited right of substitution did not undermine the fact that the ‘dominant feature’ of the contract was an obligation to provide services personally. Compare that with the Deliveroo case where the CAC said there was a genuine and unlimited right of substitution (which was a fatal bar to being a ‘worker’). So, inserting a substitution clause will generally be a good idea for the employer but it is the reality of the situation that will be looked at.
  • Restrictive covenants: the existence of restrictive covenants was one of the factors considered when deciding that the plumber was a ‘worker’. In practice, there is a temptation to include such covenants as a matter of course – but thought should be given as to whether they are really necessary. Clearly, if there are high-value arrangements involving contractors who are likely to have access to sensitive business information, then restrictive covenants are appropriate. But, for typical gig economy workers is there really any need at all for such covenants? The point is that the mere presence of a restrictive covenant will not turn a genuinely self-employed person into a ‘worker’, but it is one of the factors that will be considered. So, employers should not include such covenants unless there is a genuine business reason for doing so.

See article at [2018] LSG 25 June.


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