U.K. Court Rules Against Plumbing Company in ‘Gig Economy’ Case


LONDON — Britain’s highest court ruled on Wednesday that a plumber who had sued a large London plumbing company over working rights could not be classified as self-employed, in a case that could lead to a closer examination of the relationship between businesses and workers in the “gig economy.”

The man, Gary Smith, had worked for Pimlico Plumbers in London for six years until 2011, when he was dismissed after trying to cut his days from five to three. Mr. Smith accused the company of unfair dismissal, making deductions from his wages, not paying him for statutory annual leave, and discrimination.

An employment tribunal had previously decided that Mr. Smith had not been an employee of Pimlico Plumbers — meaning that he was not entitled to sue for unfair dismissal — but was a worker there, which meant that he could pursue his other complaints.

In Britain, people classified as workers under contract have some rights, like paid vacations and a minimum hourly wage, but not all of those granted to employees, like parental leave and protection against unfair dismissal.

Pimlico Plumbers appealed the tribunal’s decision, arguing that Mr. Smith was self-employed, a status carrying still fewer rights.

On Wednesday, the case reached the Supreme Court, where the judges unanimously dismissed the company’s appeal. Pimlico Plumbers was neither a client nor a customer of Mr. Smith, the judges said, and had exerted control over how he worked and how much he was paid.

“The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor,” the decision read.

It also pointed out that Mr. Smith had been contractually required to drive a Pimlico Plumbers-branded van.

The company will now face the accusations made by Mr. Smith in a lower court.

The company’s chief executive, Charlie Mullins, said in a statement that he was “disgusted” by the ruling: “This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get nasty surprise from a former contractor demanding more money, despite having been paid in full years ago.”

He added, “It can only lead to a tsunami of claims.”

The court’s scrutiny of the circumstances of Mr. Smith’s work could affect other companies who argue that workers in the so-called gig economy — those who, for example, work as freelancers or on short-term contracts — are self-employed, since other courts may look more closely at exactly how much control companies exert.

“This is relevant to the gig economy at large because, in many cases, workers in the gig economy don’t have any say in the prices charged, and they are under a certain degree of control from a platform,” said Valerio De Stefano, a law professor at the Institute for Labor Law and the Faculty of Law at the University of Leuven in Belgium.

Susannah Kintish, the lawyer at the London-based firm Mishcon de Reya who is leading the case for Pimlico Plumbers, maintained that the court’s reliance on details particular to Mr. Smith’s case would make it difficult for other businesses looking to use it as a reference point.

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Mr. Smith worked for Pimlico Plumbers in London for six years until he was dismissed in 2011.CreditBen Stansall/Agence France-Presse — Getty Images

“It doesn’t necessarily do anything” for other plumbers at the company, she said. “It doesn’t really even give Pimlico any guidance.”

There has been a push for tougher worker protections across Europe, spurred by a backlash against the gig economy, as well as by a number of high-profile legal cases, particularly in Britain.

In 2016, an employment tribunal ruled that a group of Uber drivers should be classified as workers, rather than self-employed contractors, as the company had argued. Uber, which counts Britain as its biggest market outside the United States, is appealing the decision.

Still, companies would have to take a closer look at their business models, Mr. De Stefano, of Leuven University, said.

“Of course, it is going to cost them because they employ a business model that uses people as workers in a way that is similar to other workers traditionally protected under labor law,” he said.

“If the business itself cannot comply with the laws that are existing, the problem is of the business, rather than the legislation.”

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