The Supreme Court justices rejected a landmark appeal by Pimlico Plumbers over the employment status of a plumber. The justices unanimously agreed that plumbing and heating engineer, Gary Smith, qualified as a ‘worker’ under employment law rather than a contractor. |
Jon Greer, head of retirement policy at Old Mutual Wealth explains the judgement could have a major impact on the gig economy as businesses will need to supply workers with benefits, including pensions. Jon Greer comments: “The Supreme Court’s decision that Gary Smith sits in the ‘worker’ bucket rather than ‘self-employed’ shifts the piping of the employment system and the impacts will be felt throughout the whole structure. “The grey area of employment categories has meant that businesses can get huge cost savings by building a staff of self-employed people. These people are taxed more lightly and businesses do not need to provide them with benefits like pensions, paid sick leave, and insurance. “Workers benefit from being automatically enrolled into pensions depending on their age and earnings. The cost of this and other benefits will hit company balance sheets and may cause them to rethink their business models. When it comes to auto-enrolment, the company will have to pay a minimum two percent employer contribution for an employee. On top of this there will be administrative costs. According to the Pensions Regulator, smaller employers can spend substantial fees for processing of up to £42 per employee per month. “Recent statistics show that most self-employed people have little confidence in their pensions, and almost half (45 per cent) of self-employed workers aged between 35 and 54 have no private pension at all. “However, this judgement and the Treasury’s crackdown on “bogus self-employment” may reduce that percentage substantially. This will clear a path to get a better picture of the savings strategy of the truly self-employed, and what savings mechanisms suit them best.” |
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