Gary Smith, who worked for London-based Pimlico Plumbers full-time for six years, took his case to the Supreme Court, over his entitlement to rights such as sick pay.
The five Supreme Court justices rejected an appeal by Pimlico Plumbers against a number of court rulings that determined he could claim “worker” status, even though he was described in his contract as a “self-employed operative”.
Announcing the decision in London, Lord Wilson said an employment tribunal was “entitled to conclude” the firm could not be viewed as Mr Smith’s “client or customer”.
The judge said: “Although the contract did provide him with elements of operational and financial independence, Mr Smith’s services to the company’s customers were marketed through the company.
“More importantly, its terms enabled the company to exercise tight administrative control over him during his periods of work; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.”
Some commentators have said the ruling is expected to have a major impact on what is often called the gig economy.
Flexible working arrangements, many of which involve firms recruiting people on a self-employed basis, have been on the rise in recent years.
It is thought the ruling could affect a number of other cases currently progressing through the courts but Pimlico Plumbers’ lawyer claimed its impact would be limited.
Susannah Kintish, of Mishcon de Reya, said: “This judgment does not lay down any new principles of law around worker status.
“Instead, all eyes will be on the government as businesses await legislation on how to categorise their workforce – something which could still be a matter of years away.
“In the meantime, the gig economy continues to evolve and existing employment law is rendered increasingly unfit for purpose.
“The Supreme Court Justices have made it clear that this judgment is very specific to the unique facts of the case.
“It will therefore do little to stem the flow of litigation around worker status which, in the absence of any overarching principles, will need to be determined on the specific circumstances of each case.”
Mr Smith was on call by Pimlico Plumbers to carry out jobs for its customers and had a company uniform and van which he rented.
He claimed that, after suffering a heart attack in 2011, he was unfairly dismissed when he tried to reduce his hours.
A tribunal made a preliminary finding that he was a “worker” within the meaning of the 1996 Employment Rights Act – a decision that was upheld by the Employment Appeal Tribunal and again by the Court of Appeal in January last year.
The Court of Appeal found Mr Smith was a worker because he was required to use the firm’s van for jobs and was contractually obligated to work a minimum number of hours a week.
As a “worker”, he was entitled to employment rights including holiday and sick pay, the court said.