A Supreme Court judgement granting an a sub-contracted plumber employment status raises the question whether gig economy workers should be entitled to be automatically enrolled into a workplace pension.
Heating engineer Gary Smith sued his former employer Pimlico Plumbers after having been dismissed in 2011 following a heart attack.
While the plumbing company had maintained that Smith was not an employee but a contractor, the Surpreme Court decided that he should be considered a worker for the firm, because he was personally obliged to fulfil the tasks assigned to him and was also expected to wear a company uniform and rent a company vehicle.
The case could have potentially dramatic implications for millions of other employees in the gig economy, including Uber and Deliveroo drivers. According to the latest government figures more than 2.8 million UK workers had been employed in the gig economy over the past 12 months, the vast majority are under 34 years old.
Equality campaigners argue that the latest judgement grants them significant rights. Rebecca Hilsenrath, chief executive at the Equality and Human Rights Commission, argues: “This is one of the biggest decisions ever made by the courts on workers’ rights. Thousands of workers like Gary Smith could now find themselves with the added security of benefits like sick pay and holiday pay.”
Yet industry experts remain cautious whether gig economy workers could also be entitled to be automatically enrolled into a workplace pension, which would oblige their employer to contribute at least 2% of the employees income into the scheme.
A spokesperson for The Pensions Regulator commented on the case: “We will study the Supreme Court’s judgement and consider its implications. Employers have a duty to automatically enrol qualifying workers into a workplace pension scheme and we carry out checks to ensure employers are giving their staff the pensions they are entitled to.
“We will continue to liaise with Pimlico Plumbers for information about its workforce and pension arrangements so that we can assess whether it is compliant with its automatic enrolment duties.”
James Bingham, associate director at lawfirm Sackers, which specialises in pensions law, remains cautious: “The fact that in this case the employer had not correctly categorised Mr Smith, (and therefore not auto-enrolled him), does not mean that other employers have acted in the same way. As such, there is no basis for saying that huge numbers of people have been incorrectly treated as falling outside the auto-enrolment regime.”
Ian Neale, director at Aries Insight, adds: “It’s questionable whether employers in this position can be said to have ‘neglected their auto-enrolment duties’, though; especially if to date HMRC has accepted the workers in question were self-employed for tax and NIC purposes.
“Normally the Supreme Court is the final authority in the UK legal system, though occasionally the Court refers a matter to the CJEU. I cannot yet say with certainty whether the Court left open any such loophole; but I think it is unlikely. Absent that, there is probably an immediate duty upon Pimlico Plumbers to automatically enrol all eligible jobholders into a qualifying pension scheme. As to whether the judgement creates any retrospective obligation, we cannot comment and must await an authoritative statement from at least TPR,” Neale concludes.
