Pimlico Plumbers Case – More Tax Challenges for Gig Economy
Pimlico Plumbers has lost its case before the Supreme Court and Mr Smith (a self-employed plumber) has been found to (also) be a worker.
As a consequence of worker status, Mr Smith is entitled to holiday pay and sick pay, although it should be noted that the rights enjoyed by a worker are less extensive than those of an employee (including no entitlement to claim unfair dismissal).
Any client who engages self-employed contractors/consultants (the “gig economy”) are potentially likely to face claims for holiday pay if the detailed circumstances of the engagement (as opposed to the contractual terms) should correctly classify the individual(s) as a worker or, indeed, an employee.
Employment status has always had an element of doubt (since it is a question of both fact and the contractual terms that apply) and the potential for challenge is well known. To that extent this case is nothing new. However, the fact that it is now clear, from the highest court in the land, that an individual who, for tax purposes, can be self-employed and can also be a worker (for certain employment rights) makes it highly probable that there will be a profusion of status claims in the next couple of years. Further cases such as Uber and Deliveroo are yet to be heard.
There is a clear risk that where individuals who are engaged as self-employed seek to be classified as a worker, the correct classification (after review) may actually be that of an employee. Whether such reviews identify the correct classification as worker or employee, there is a considerable period of uncertainty and potential challenge ahead for those who engage under “gig economy” arrangements.
Now may be an opportune moment to review your existing arrangements. For more information or to speak with one of our advisors click here.