Supreme Court Judgement – Further evidence that HMRC’s view on Employment Status is flawed
Posted on 13th June 2018 at 15:11
We closely follow all cases in relation to Employment Status and IR35 but this particular case has hit the headlines. By the time this blog is published, most of you will have heard a mention of this case on social media or on the news. If you want a quick and concise summary, read on.
Back in 2011 Mr Smith sought legal action against Pimlico Plumbers following his dismissal after putting in a flexible working request to enable him to work part-time following ill-health.
He claimed that his dismissal was tantamount to disability discrimination and showed a complete disregard for basic workers’ rights.
His case relied almost solely on the Tribunal’s interpretation of his employment status. Essentially, to be entitled to basic worker’s rights, Mr Smith had to evidence that he was a “worker” as opposed to a “self-employed operative” as stated in his contract.
The Tribunal ruled in Mr Smith’s favour in 2011 after determining that he was indeed a worker.
After several years, an appeal by Pimlico Plumbers was today heard by the Supreme Court and the original judgement was upheld by five Supreme Court justices.
The key points referred to by Lord Nicholas Wilson were in regard to MOO (Mutuality of Obligation) and he made particular reference to another case; Windle v Secretary of State for Justice (2016). For this reason the main focus in determining this case was whether the contract between Mr Smith and Pimlico Plumbers put obligations on Mr Smith to accept work and for Pimlico to provide work.
Lord Wilson ultimately determined that “it would seem hard to understand why, in the normal course of events, Pimlico would not be content to be obliged to offer work to him”.
In addition to MOO, other indicators of an employment relationship were noted as follows:-
Part and Parcel – As stated by Lord Wilson “Mr Smith’s services to the company’s customers were marketed through the company” i.e. he was held out to be part and parcel of Pimlico and therefore not independent.
Direction and Control – Within the contract, as identified by Lord Wilson, there were clauses that “enabled the company to exercise tight administrative control” and “to restrict his ability to compete…following any termination of their relationship”.
Supply of Equipment/Business-like Working – The court also heard that Mr Smith used a Pimlico Plumbing van to carry out work assignments.
So, what happens now?
The Chief Executive of Pimlico Plumbers, Charlie Mullins called the decision “disgraceful” and that “The case is not over…We could possibly go to a European court of law”.
We will keep following the case.
What does this mean for me?
The good news for the fight against the IR35 Private Sector reforms is, in the word of Dave Chaplin, CEO at ContractorCalculator “The fast that the Supreme Court considered MOO alone reinforces the fast that CEST is not fit for purpose”.
The case also once again shows that Employment Status for Employment Rights does not always follow or align with Employment Status for tax purposes. This adds further weight to the argument that reforms cannot go ahead as proposed until further consultation is carried out to remove the complexity – particularly as the so-called gig economy continues to grow.
Is there anything I can do now?
Yes, you can:-
1. Review your contract in detail – and remember that we provide a full IR35 review service.
2. Open up the communication channels with your agency and end-client ready for any discussions and negotiations.
3. Stay up-to-date by following our blog and follow us on social media.
Nicola J O'Sullivan -
Founder | Xero Champion | IR35 Expert
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