Contractor’s bid for employment rights denied as Tilson loses Tilson v Alstom appeal

IR35 Test

Contractor Andrew Tilson has lost his bid to overturn a previous ruling by the Employment Appeals Tribunal (EAT) that he was an employee of his former client, Alstom Transport. The Court of Appeal has ruled that there was no direct contractual relationship between Tilson and Alstom Transport, upholding the decision of the EAT.

Tilson’s original case gained notoriety in June 2009, when an Employment Tribunal ruled that his relationship with Alstom Transport was one of employment, and that the contractor qualified for employment rights. This in turn meant he could claim unfair dismissal from Alstom Transport when his contract was terminated. It was the first ruling of its kind since the James v Greenwich ruling set a precedent denying all contractors employment rights.

However, in the decision in the Court of Appeal on 19 November 2010, Lord Justice Elias confirmed that the Employment Appeals Tribunal was right to reject the original Employment Tribunal ruling as being ‘misdirected in law’.

“…there was no proper basis on which any employment tribunal, properly directing itself on these facts, could find that there was a direct contractual relationship between Alstom and the appellant,” Elias confirmed in the ruling. The decision was unanimous, with fellow judges Lord Justice Pitchford and Lady Justice Arden in complete agreement.

The judge cited a number of factors contributing to the decision. These included the lack of intention to form an employment contract between Tilson and Alstom Transport. Another important factor was that integration of a worker into an organisation and having to apply to a line manager before taking leave does not automatically imply the existence of an employment contract.

The decision of the court of appeal is likely to end the hopes of long-term ‘permtractors’ that they may qualify for employment rights from end-user clients. It also means that genuine contractors facing IR35 investigations will not be able to use the original ruling to support their defences.

Published: Thursday, November 25, 2010

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