Charlie Mullins, CEO and founder of Pimlico Plumbers has warned that UK companies using self-employed contractors face a ‘tsunami of claims’ after his company lost an appeal at the Supreme Court.
Pimlico Plumbers took its appeal to the highest court in the country after it lost a claim by self-employed plumber Gary Smith who, despite being paid more than £500,000 over three years by Pimlico Plumbers, sued for employment rights, even though he signed a contract as a self-employed contractor.
The five Supreme Court judges, who heard the appeal in February, found in favour of Mr Smith, which will now impact employers across the country.
Charlie said: “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.
“In fact, this was exploitation, but instead by a highly-paid, highly-skilled man who used a loophole in current employment law to set himself up for a double pay-day.
“The shame of all this is that it is generally accepted that current employment law is not fit for purpose and needs to be changed. But when it’s put to the test in our highest court there isn’t even the slightest suggestion that there is a problem that needs to be addressed.
Charlie added: “This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get nasty surprise from a former contractor demanding more money, despite having been paid in full years ago. It can only lead to a tsunami of claims.”
Charlie also criticised the approach to the case taken by the Supreme Court judges who failed to use the appeal as an opportunity to recognise that UK employment law is outdated and needs changing to bring it into line with modern working practices.
He said: “I’m supposed to say I’m disappointed with the outcome of the appeal. In reality, I am disgusted by the approach taken to this case by the highest court in the United Kingdom.
“The five judges had the opportunity to drag our outdated employment law into the 21st century, but instead they bottled the decision, and as a result thousands of companies across the UK, who use contractors in an honest and responsible way, remain exposed to huge potential claims in the future.”
Mr Smith did not comment after the case.
Phil Pepper, employment partner at law firm, Shakespeare Martineau, said: “The Supreme Court’s decision will no doubt have dealt a heavy blow to Pimlico Plumbers. It acts as a stark reminder for organisations who use self-employed contractors to ensure that any agreements are worded correctly – in the physical sense, as well as in practice.
“The right of substitution was a significant reason why the Supreme Court was unable to find that Mr Smith was genuinely self-employed. Pimlico Plumbers had a very restricted approach to this right which ultimately worked against it.
“Immediate changes must be made to accommodate this decision, otherwise Pimlico Plumbers and other organisations could face numerous legal challenges. These may prove to be costly, both financially and reputationally.”