Employment status in the UK: implications for business owners

The ever-evolving nature of the modern workplace has seen employers being thrown into the media spotlight over the past 18 months. Generating the most interest recently has been a case involving a plumbing firm, Pimlico Plumbers, and an individual, Mr Smith, who brought several claims after being dismissed following requests to reduce his working hours following a period of ill-health.

Mr Smith brought claims of unfair and wrongful dismissal, disability discrimination, unpaid wages and holiday pay against his previous employer. The key question for the employment tribunal to answer in the first instance was whether Mr Smith was, in fact, an employee, a worker, or was self-employed, because his rights (and therefore, ability to make the claims presented) hinged on where in the three-tiered hierarchy Mr Smith sat.

Following a sequence of judgments and appeals all the way to the Supreme Court, Mr Smith was ultimately found to be a worker.

When employers get their assessment of employment status wrong, not only they can they get tribunal judgments against them publicly published and suffer the related reputational damage that follows, they also risk a huge financial burden of other claims being made by the remainder of the workforce. If an individual is deemed to be an employee, they will benefit from the greatest level of employment law protection and will have the right not to be unfairly dismissed. It is, however, more common for individuals who are thought to be self-employed to be determined to be workers, which entitles them to be paid national minimum wage, and receive holiday pay and pension contributions.