Contractor or employee? What the recent Supreme Court ruling means for your agency

Contractor or employee?

26th June 2018

You may have seen the recent UK headlines about a heating engineer winning his Supreme Court claim against his employer, Pimlico Plumbers, which had unsuccessfully argued that he was self-employed and not a worker. The employee had been with them for six years and had claimed that he was dismissed after requesting fewer days’ work following illness.

The line between contractor and employee

The court unanimously judged that, while the employee did have some operational and financial independence, the company couldn’t be regarded as a client or customer. It also found that some of the worker’s conditions “betrayed a grip on his economy inconsistent with him being a truly independent contractor.” For example, he had been subject to restrictions such as wearing company uniform, carrying their ID card, driving a branded van equipped with a tracker and being prohibited from competing for plumbing work even if their relationship was terminated.

The fact that this case was heard at the UK’s highest court and that judgement was unanimously found to be in favour of the engineer means that it could set a precedent which could influence other cases.

Risk is growing

We are already seeing other major businesses involved in ongoing disputes about employment status, such as Uber and their drivers. And, given the global growth of the gig economy, we fear that this could set a precedent for authorities worldwide to begin challenging the status of workers. If it does, it will further complicate compliance for agencies, their contractors and clients, and could lead to even more confusion over how to classify self-employment.

With 4.8 million subcontractors in the UK alone and growing, the risks for recruitment agencies are increasing. We strongly advise firms to review their subcontractor arrangements to make sure that they could withstand an employment status challenge. Contact the 6CATS team today to find out how we can help.


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