The Supreme Court has ruled that a heating engineer engaged by Pimlico Plumbers is entitled to back-dated holiday pay.
The finding has overruled a previous Employment Appeal Tribunal that had said the claim was out of time, and shows the far-reaching implications of using the wrong employment status when engaging contractors or casual workers.
What happened in this case?
Pimlico Plumbers engaged heating engineer Mr Smith as a Self-employed contractor for six years until 2011, since then a Supreme Court ruling found the working relationship to show he should have been classified as a worker.
Employment status can be complicated and as this case shows, getting it wrong can lead to lengthy and costly court proceedings for employers.
Mr Smith subsequently made a claim for the paid holiday that he should have received during the course of his contract, but hadn’t due to the incorrect classification of his employment.
The recent ruling, which has found that he is now owed back-dated holiday pay is a warning to employers regarding their obligation to check that employment status is correct, but also a reminder on the importance of holiday pay compliance.
What is the difference between ‘self-employed’ and ‘worker’?
Self-employed people choose when and how they work, can send a substitute to complete their work and are not entitled to paid holiday or other employment rights.
A worker has to complete their work personally. The employer has more control over the relationship, although not as much as with an employee, and workers get some employment rights.
In short, a worker is somewhere in between an employee and a self-employed person, but there is a lot more to it than that.
If you want to check that you are using the correct employment status or have questions regarding holiday pay calculations, please call us. We will explain in full to make sure that your business is compliant.
