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UK Court Ruling May Affect Labor Rights in 'Gig Economy'

by Danica Kirka
Saturday Feb 11, 2017
UK Court Ruling May Affect Labor Rights in 'Gig Economy'

A London plumber who worked as a contractor for a company for years has won a court ruling giving him employment rights, in a case seen as a key test of labor rules in the so-called gig economy.

The Court of Appeal on Friday upheld a ruling that the plumber, who worked for Pimlico Plumbers full-time for six years, was entitled to rights such as sick pay.

Gary Smith claimed he was unfairly dismissed after seeking to reduce his hours following a heart attack, while the company argued he wasn't entitled to such protection because he was a self-employed contractor. Pimlico said it may appeal.

The case has significant implications for the estimated 100,000 independent contractors in Britain's gig economy, where people work job-to-job with little security and few employment rights. Such workers are often dispatched by app-based companies like the ride-hailing service Uber, as the internet and smart phones cut the link between jobs and the traditional workplace.

"This will be an important judgment for years to come," said Sean Nesbitt, a partner in the employment team at the international law firm Taylor Wessing, which is not involved in the case.

The ruling is similar to one issued late last year by Britain's employment tribunal in a case involving Uber. That tribunal ruled that two drivers who sued the company were employees and so were entitled to paid time off and a guaranteed minimum wage.

The detail in the 31-page judgment in the Pimlico Plumbers case suggests that the Court of Appeal wanted to offer clarity at a time of dramatic change, Nesbitt said.

The court "is trying to lay the foundations for people in the gig economy to understand their rights - especially workers - but also businesses, and the judgments they need to make between flexibility and protect their brand and customer base," he said. "It's a senior court trying to close down loopholes."

Nesbitt particularly pointed to suggestions in the court documents that "restrictive covenants" - or those which prevent a worker from seeking work with competitors - may give otherwise independent contractors the rights of workers.

"In other words, a business like Pimlico cannot have its cake and eat it," Nesbitt said. "If it wants to say someone is self-employed, their economic freedom and ability to compete are an important feature of that status."

Some companies have argued that the gig economy's system of self-employment provides lifestyle benefits for people who choose where and when to work. Such arrangements also allow companies to avoid many expenses associated with hiring full-time employees.

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