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A British Plumber May Show Uber the Future of Employment (bloomberg.com)
A British plumber may show Uber the future of employment. From a report: The U.K.'s top judges ruled Wednesday that Pimlico Plumbers Ltd. should've treated one of its tradesman as a "worker," giving him the right to vacation pay and to sue the company in a decision that could have ramifications for other gig economy lawsuits. Supreme Court judges found that plumber Gary Smith, who worked for London-based Pimlico Plumbers between August 2005 and April 2011, wasn't self-employed or a client of the firm, giving him the right to sue the company under discrimination laws.
"This is one of the most significant employment status decisions we have seen in the last five years," said James Murray, an employment lawyer at Kingsley Napley in London. Uber and other app-based firms will be watching the ruling with interest as they face similar legal challenges over the way they treat employees. Uber's appeal of a decision granting its drivers benefits including overtime and paid vacation is scheduled to be heard by another court October 30. Meanwhile Deliveroo, the food-delivery service, is currently battling the IWGB union over its riders' employment status and in May, taxi service Addison Lee lost an appeal over whether drivers were independent contractors or employees with rights to benefits.
"This is one of the most significant employment status decisions we have seen in the last five years," said James Murray, an employment lawyer at Kingsley Napley in London. Uber and other app-based firms will be watching the ruling with interest as they face similar legal challenges over the way they treat employees. Uber's appeal of a decision granting its drivers benefits including overtime and paid vacation is scheduled to be heard by another court October 30. Meanwhile Deliveroo, the food-delivery service, is currently battling the IWGB union over its riders' employment status and in May, taxi service Addison Lee lost an appeal over whether drivers were independent contractors or employees with rights to benefits.
The court decided he was a "worker" - that's an intermediate category between being employed and self-employed. You'd think the categories would be aligned for the purposes of employment law and tax law, but that would be too easy...
HMRC are coming after people who were operating through service companies (and paid themselves mostly in dividends therefore avoiding NI altogether). but self-employed people now pay a substantially similar level of NI to the employed for the services they receive (given that they don't get unemployment benefit, for example) so there would be little benefit in trying to make a case.
I don't know for the UK, but in other countries, the question of self employment or not depends on who is your largest customer, and if this customer demands priority services or other exclusivity, limiting your ability to search for other contracts. If your ability to independently decide which assignment to take is severly limited by your largest customer, and your income strongly depends on his jobs, then you are in fact employed and not a free agent.
Key facts in this case
- He had to work 5 days a week for a minimum of 40 hours
- He had to wear the company uniform and drive a company-logo van
- He couldn't send someone else to do the work (substitution) (although under limited circumstances a different pimlico employee could do work)
- There were significant limitations on his ability to work for other people or competitors
the courts basically looked at this and said; Yup - he looks an awful lot like an employee rather than an independent self-employed person.
More generally, the way the contract was written shows that Pimlico were trying to present to customers that the plumbers were employees, whilst making the plumbers not employees so that they could limit tax and avoid certain obligations. The UK courts are getting increasingly vociferous in saying that this is not ok.
http://www.bailii.org/uk/cases...
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Yeah that won't work in the UK. The government became wise to that years ago.
Depends how much he earned; his employer would certainly be on the hook for a bill. Assuming the median wage of about 24k a year:
EMPLOYEE:
Gross Income: £24k (Employer also pays £2k in NI)
Income Tax: £2.5k (20% of above £12k)
Employee NI: £1.9 (12% Class 1 NI above £8k)
Total tax paid: 6.4
Employee Net: 19.6
CONTRACTOR:
Gross income: £24k ("Customer" pays no NI)
Income Tax: £2.5k (20% of above £12k)
Employee NI: £2 (9% Class 4 NI above £8k, plus £150 in Class 2 NI)
Total Tax Paid: £4,5k
Employee Net: £19.5k
Of course plumbers probably earn a bit more than average, so the influence of Class 2 NIs is relatively less, but it's likely pretty minor compared to how he's getting screwed out of holiday pay (5.6 weeks per year minimum), sick pay etc.
For the UK, HMRC look to see whether an individual is an "employee in disguise". Do they work at the customers premises. Does the company provide tools. Does the individual work his own hours? Does the individual service multiple clients?
In this case, the plumbing company provided the van, the tools and customer bookings, plus require the individual works a minimum number of hours.
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