Supreme Court Decides Contract Matters

Thu, 14 Jun 2018

Supreme Court Decides Contract Matters

The ‘gig’ economy cases, scattered throughout the different tiers of varying jurisdictions of courts and tribunals, excite much interest when the latest decision is published and flashed across the media. The recent decision of the Supreme Court in Pimlico Plumbers and Anor v Smith, handed down on 13 June 2018, will be no exception.

You all remember the facts of course, but I’ll just refresh your memory. Mr Smith worked for Pimlico Plumbers Limited as (spoiler alert) a plumber. He had two agreements with Pimlico, the first of which had handwritten amendments to alter those words which referred to employment (because we all know labels are what matters...). The second agreement was rather more subtle in its drafting when attempting to cast the relationship as one of independent contracting.

As an aside, Pimlico adduced into evidence a third contract brought into use after the relationship between Pimlico and Mr Smith had broken down. The interpretation of this by the judge at first instance formed part of Pimlico’s arguments on the appeal, although Lord Wilson gave that argument short shrift, in what must be high up the list of pithy judicial put-downs, noting: “So Pimlico there put before the tribunal an irrelevant contract, cast in highly confusing terms, and now complains that the tribunal’s interpretation of them was highly confused.” (Sub-lesson to litigators, think about what evidence is actually relevant to the issues the court has to decide.)

The Supreme Court had to decide whether the decisions below had correctly dealt with two issues: did Mr Smith have a duty of personal performance and if so, was Pimlico nonetheless a client or customer. In short the Supreme Court agreed that, yes, Mr Smith did have a duty of personal service and no, Pimlico was not a client or customer of Mr Smith. As such the appeal was dismissed.

The route the Supreme Court reached that decision was not, however, at all controversial. It required them to break no new ground. At risk of sweeping statements, this was simply a case about objectively determining the meaning of a contract. Many lay people may read about the manuscript alterations to the first agreement and the following comment of Lord Wilson and wonder what on earth anybody found to argue about:

“The contract made references to “wages”, “gross misconduct” and “dismissal”. Were these terms ill-considered lapses which shed light on its true nature?”.  

It is always dangerous to try and summarise 50 paragraphs from a Justice of the Supreme Court, but I will try anyway. If you objectively require personal performance of a contract when you are not a client or customer, then the other party will proably turn out to be a worker (and in your employment for the purposes of the Equality Act 2010).

The upshot for Mr Smith? He can now have his claims, first issued in August 2011, substantively determined in the Employment Tribunal.

Alex Mellis
Employment Group

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