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Limited company sub-contractor deemed to be 'employee' in unfair dismissal claim

Published on Jul 1, 2009 |

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Please note that the case detailed in this article was subsequently referred to the EAT in November 2009, with the original decision being reversed. Tilson was subsequently found to be an independent contractor after all.

A recent Employment Tribunal has found in favour of a limited company sub-contractor, who successfully managed to claim for unfair dismissal against his client as his working practices were seen to be akin to those of an 'employee'.

Andrew Tilson, a sub-contractor, working through his own limited company, took Alstom Transport to an employment tribunal - claiming for unfair dismissal.

Alstom, which operates several underground train services in the capital, claimed that Tilson could not claim for unfair dismissal as he was working via his own limited company, and was not an employee.

However, Tilson's barrister argued that, despite paying his own income tax and NICs, the way the claimant interacted with Alstom at the Golders Green depot was the true indicator of his employment status.

The Tribunal Judge agreed, and said that the close working relationship between the claimant and Alstom Transport demonstrated that Tilson was, in fact, an "employee", and could therefore claim for unfair dismissal under the terms of the Employment Rights Act 1996.

This hearing could have have ramifications for users of sub-contractors in many other industries apart from IT, and is more evidence that the true employment status of contractors can only be derived from the true working practices they follow, rather than the wording of any contracts they have in place, or the company structure they work under.

You can read Phil Richards' analysis of what this case means for contractors here.