First Uber drivers and now Pimlico plumbers have thrown a spanner in the works of the gig economy, which is predicated on the concept that each piece of work is the equivalent of an individual ‘gig’ thereby dispensing with the need for employees and basic employment protections.

Earlier last week the UK Supreme Court found that Mr. Gary Smith, who worked for Pimlico Plumbers for several years, was a worker and not an independent contractor.

Why is this significant? It is significant because a worker is entitled to certain employments rights such as the right to statutory minimum annual leave, whereas an independent contractor, is not. Workers are the half-way house between employees who have the best, and independent contractors who have the least protections, under employment law.

In Mr. Smith’s case he worked for Pimlico Plumbers for six years, when he had a heart attack. Following this he sought to reduce his working week from five to three days whereupon Pimlico Plumbers dispensed with his services.

Mr. Smith brought a claim for unfair dismissal against Pimlico Plumbers on the basis that he was an employee. He lost on this point but argued before the Supreme Court that even if he wasn’t an employee, he was (1) a worker within the meaning of the Working Time Regulations 1998 which gave him a right to statutory annual leave; (2) he was a worker within the meaning of section 230(3) of the Employment Rights Act 1996 which protected him from any unlawful deductions from his wages and (3) that he was ‘in employment’ within the meaning of section 83(2)(a) of the Equality Act 2010 thus making it unlawful to discrimination against him on the grounds of his disability.

The Supreme Court found in his favour on all three grounds.

Definition of a worker

Mr. Smith’s case hinged on whether he came within the definitions of “worker”. Section 230(3) of the Employment Rights Act 1996 defines a worker as (a) an employee under a contract of service and (b) an individual who has entered into or works under “any other contract…whereby the individual undertakes to …perform personally 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 of any profession or business undertaking carried on by the individual.”

The essential features of sub-section (b) or limb (b) of the 1996 Act is that the service must be personal service i.e. performed personally by Mr. Smith and not someone else and, the status of Pimlico Plumbers is not that of a client or customer to Mr. Smith.  The Supreme Court looked at both concepts in detail before arriving at its conclusion that Mr. Smith came within the definition.  This meant that Mr. Smith could claim the protections under the section 230(3) of the Employment Rights Act and under the Working Time Regulations where the definitions are the same.

Status under the Equality Act 2010

The Supreme Court dealt with this issue in a few succinct paragraphs. It said that section 83 was intended to give effect to EU law, article 157 of the Treaty on the Functioning of the European Union in particular. It said that in Allonby v Accrington & Rossendale College (Case C-256/01) [2004] ICT 1328, the Court of Justice of the European Communities, at para 67 & 68, interpreted the word “workers” in article 157 as persons who perform “services for and under the direction of another person in return for which they receive remuneration” but excluding “independent providers of services who are not in a relationship of subordination with the person who receives the services.”  In Hashwani v Jivraq [2011] UKSC 40, [2011] 1 WLR 1872, the Supreme Court applied the concepts of direction and subordination and in Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, [2014] 1WLR 2047 Lady Hale at paras 31 &32 observed that that interpretation yielded a result similar to the definition of worker in the Employment Rights Act 1996.

The Irish position

Apart from the Industrial Relations Acts, the term “worker” is not used that extensively in employment legislation but, that doesn’t mean non-employees/workers do not have rights under existing employment laws.

Employment Equality Act 1988 as amended

Like the UK Equality Act, the 1988 Act is required and does give effect to EU law and applies not just to employees, but also to workers as defined by EU equality law.

Organisation of Working Time Act 1997

Again, this Act is required to give effect to EU law and the Working Time Directive, in particular.  The Working Time Directive provides that every worker has the right to annual leave and rest breaks etc. The European Court has said that the definition of worker within the meaning of the Directive is a matter for the European Courts and not the member states. The European Court has defined worker under the Directive and that definition is arguably wider than the definition in the 1997 Act which is confined to employees, apprentices and agency workers.

Payment of Wages Act 1991

This Act covers those whose contract of employment is defined as

(a) a contract of service or of apprenticeship, and

(b) any other contract whereby an individual agrees with another person to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract) whose status by virtue of the contract is not that of a client or customer of any profession or business undertaking carried on by the individual, and the person who is liable to pay the wages of the individual in respect of the work or service shall be deemed for the purposes of this Act to be his employer,

The language at (b) above is similar to the definition in the UK Employment Rights Act 1996 and could be said to include workers.

Conclusion

Employers can expect to see similar type challenges in Ireland and the Pimlico Plumbers and Uber cases provide the road-map.