Difference between employees and self-employed contractors with reference to Pimlico Plumbers Ltd v Smith [2018] UKSC 29

Running head: Law for Accounting and Finance

Law for Accounting and Finance 1
“Difference between employees and self-employed contractors
with particular reference to Pimlico Plumbers Ltd v Smith
[2018] UKSC 29.”
A ‘Contract of Service’ explains the association between employer and employee. It comprises
of the terms and conditions of employment such as essential clauses, eh scope of the job and
hours of work. Thus a contract of service is an agreement in which one individual express his
consent to appoint other person as his employee and the other individual approves to assist the
employer as an employee. The agreement can be in written or verbal along with being expressed
or implied. It may in the form of a letter or apprenticeship agreement (Ernst Kossek, Kalliath and
Kalliath, 2012, 738-753).
A ‘Contract for Services’ is used for employing a self-employed individual like a consultant so
that he can execute the services for another party in which the relationship between both of them
is not that of an employee or employer. In the contract for services, the independent contractor
such as the self-employed person is appointed for a fee in order to execute a task or project.
There are certain differences between “Contract of Service “and “Contact for Services”.The
former has a relationship of employer and employee whereas the latter has the relationship
between client and contractor. The employee is bound to carry the business of the employer in
the contract of service whereas, in the contract for service, the contractor carries on the project
on their own.So , in this essay, the differences between the contract of services and contract for
services will be discussed in the light of important cases decided by the Supreme Court ( Selwyn
and Emir, 2014, 6).

Law for Accounting and Finance 2
The employees which are permanent have the contract of service with their employers. The
important rights and accountabilities of the status of the employee as per the contract of service
are that the workers are managed by their employers i.e. the task must be performed as per the
instructions were given to the line managers as per the description of the job. The workers must
be presented personally at the job and they cannot send the substitute to work.
The employees have the statutory rights to the holiday, sick, maternity and paternity packages
and payments related to redundancy. The workers are expected to work at a specified place at
specific hours on particular days. They also have the rights given by the statute regarding the
way they are to be asked for leaving their employment. They are also not personally liable to
their employer for any omissions and commissions made by them during the course of work
neither they are expected to make them good during the course of the job.
The relationship between the employer and employee is known as ‘mutuality of obligation’ or
MOO. It pertains to the liability of the employee to perform the task and the obligation of the
employer to provide the task to him. He has to perform every task which comes down to him. In
case he fails to perform the task, the employer takes action against him resulting in his dismissal.
Simultaneously, if the employer fails to provide a job to the employer, then the employee can
take action resulting in an industrial tribunal (Cunningham, 2012, 1-70).
On the other hand, in the case of a contract for services, the employees are known as self-
employed and they have fewer obligations and do not have any employment rights. For instance,
they are able to end their substitutes at work. Their interests are protected under the” Code of
Employment Agencies and Employment Businesses Regulations 2003”. They would be paid

Law for Accounting and Finance 3
their salaries even if the employing agency has not been paid by the hiring company (Prassl and
Risak, 2015, 619).
In the employment law of UK, the employment status of the person is determined by the analysis
of the rights and responsibilities. As held in the case of Aslam and others v Uber BV and others
[2018] ICR 453 EAT, a question was raised that whether the drivers have the right as workers or
they were self-employed? As per section 230(3) of the Employment Rights Act 1996, a worker is
defined as a person who has entered into or worked as per the employment contract in which he
undertakes to perform any work or service personally and the employer is not his client (Hepple,
2013, 203-223).
So, in this case, Uber has claimed that the individuals are self-employed and the former provides
them a technology platform so that the taxi services can be facilitated. The vehicles are provided
by the individuals and they are responsible for their maintenance. They are not liable to be
committed to work.
However, the drivers alleged that they are workers and should be eligible for rights which are not
available to the self-employed workers such as the right to minimum wages and holiday pays.
The decision of the employment tribunal was that the individuals are workers. After analyzing
the reality of the situation, it had concluded that the drivers cannot negotiate with the client and
they are bound to accept the rides as per the terms set out by Uber. The routes and sanctions are
set by Uber even if the driver departs from it. Some of the financial risks are borne by Uber
(Sanders, 2016).
As per the judgment in the case Pimlico Plumbers Ltd & Mullins v Smith [2018] UKSC 29, it
was decided that Mr. Smith was a worker and not a self-employed contractor. Mr. Smith was a