The Court of Appeals ruled against Pimlico Plumbers in a case concerning employment status today.
The court ruled that Gary Smith, previously a plumber with the company, was a "worker", and as such should have been afforded basic workers' rights, such as sick pay.
This is how legal experts reacted to the court's decision:
Continuing the trend
Yvonne Gallagher, employment partner at Harbottle & Lewis, said the ruling showed that employment judges "are willing to confirm worker status and that complex contractual arrangements designed to avoid this are unlikely to be unsuccessful where the reality is that an individual spends all of their working time performing duties for one organisation on a continuous basis".
She added that, while a similar judgment against Uber is being appealed, "the trend towards finding worker status so that individuals benefit from some protection looks set to continue".
The devil's in the detail
"This case is the latest in a series to examine business models which seek to control people as if they were employees but pay (and tax) them as if they were not," said Jonathan Chamberlain, partner at the law firm, Gowling WLG.
"Once again, the so-called 'self-employed' have been found to be workers. But those business models are not going to disappear. So much depends on the detail: a tweak to contracts here, a change in working arrangements there and the position could be completely different. As long as there is any disparity in pay, tax and work-related statutory protections, businesses and individuals will look to arbitrage them."
"In theory, the business model adopted by Pimlico Plumbers offers flexibility to both the employer and employee," said Phil Pepper, employment law partner at Shakespeare Martineau.
"However, employment practices cannot be left unregulated and rights of workers and employees cannot be ignored unless businesses are willing and ready to face the backlash of legal and reputational repercussions. It is stark reality that the application of employment rights will often mean that companies are unable to adopt the agility needed to support their success."
"This decision reinforces the warning to businesses to take particular care with written and practical arrangements with staff when seeking to establish the status of their workforce," said Sarah Ozanne, an employment lawyer with law firm CMS.
"It also reinforces the difficulty for businesses wishing to balance a flexible workforce against the need to retain consistent business practice. Whilst a blow for some employers, this higher court decision reinforces the current legal test on the issue of employment status."