UK plumber's suit shows Uber how judges feel about gig economy

The gig economy has come under the microscope in the UK. Photo/123RF.

A British plumber may show Uber the future of employment.

The UK's top judges ruled Wednesday that Pimlico Plumbers should have 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.

Wednesday's ruling focuses on a central tenet of the gig economy. Treating workers as contractors, not employees, allows companies to keep costs low, cut down on red tape and avoid paying benefits. Uber has long argued the model benefits workers in the gig economy by giving them flexibility and choice in when they work and how much.

The court looked closely at the relationship between Smith and Pimlico Plumbers.

"Although the contract did provide him with elements of operational and financial independence, Smith's services to the company's customers were marketed through the company," Judge Nicholas Wilson said in a summary of the case.

Pimlico's chief executive officer, Charlie Mullins, and its lawyers tried to play down the importance of the ruling, arguing that lawmakers are currently reviewing the country's employment laws.

"For those who think this is a victory for poorly paid workers everywhere, against large corporations who exploit their lack of bargaining power, think again," Mullins said, adding that he was "disgusted" by the ruling. The company had already lost twice at lower courts.

Lawyers, however, said the ruling brought clarification on workers' rights.

"This welcome decision clarifies how people in the gig economy fit into the workplace ... ," said Stephen Morrall, an employment specialist at Hunters Solicitors.

- Bloomberg