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LANDMARK RULING - SUB-CONTRACTOR OR EMPLOYEE?

LANDMARK RULING - SUB-CONTRACTOR OR EMPLOYEE?

A landmark ruling in which a sub-contractor was deemed to be an employee could affect the employment status and legal rights of thousands of other so-called sub-contractors working in the UK.

The ruling has implications for hundreds of workers in the transport industry generally, as well as workers in a number of other sectors where contract labour is traditionally used such as large-scale construction projects like the Olympic site in east London, together with the NHS, education, IT and banking sectors.

At the hearing in Watford, the Employment Tribunal found that despite providing his services through both a separate limited company wherein he billed on an hourly basis as well as being paid through a designated separate payroll company, Andrew Tilson was, in fact, an employee of Alstom Transport under the meaning of the Employment Rights Act 1996 and, as such, was entitled to claim unfair dismissal against the company.

Alstom, which maintains and operates the entire fleet of trains on London Undergrounds Jubilee and Northern lines, argued that Tilson, who was working at the companys Golders Green depot, was self-employed and provided his services via a limited company rather than under a contract of employment.

Represented by Harold Benjamin Solicitors, Tilson's barrister, Mark Sahu of Mitre House Chambers, successfully argued that despite paying his own income tax and National Insurance contributions, the way in which his work was structured and the manner in which he worked for Alstom and the tasks he performed on the companys behalf were the real indicator as to his employment status.

Finding for Tilson, the Tribunal Judge agreed that the close working proximity between Tilson and Alstom was the critical factor in determining his employment status and, as an employee rather than a self-employed sub-contractor, he was entitled to claim unfair dismissal.

"This is an extremely important Tribunal ruling which could affect the employment status and legal rights of thousands of sub-contractors working in the UK," said Cyril Dennemont, Partner and Head of Employment at Harold Benjamin in Harrow.

"The Judge decided that the over-riding criteria in deciding Tilsons employment status was the way in which he provided his services to Alstom. This is a significant judgment as it followed the latest Court of Appeal guidelines on employee status, as reviewed in James v Greenwich Borough Council.

"Having been promoted to a senior managerial position in March 2006, the work he did and the wide range of duties and responsibilities he had for the company and the manner in which he was supervised on a day-to-day basis meant that, in effect, he was deemed to be an employee."

Cyril said that many sub-contractors working in a similar way to Tilson could, unknowingly, find themselves treated by the Tribunals as employees.

"Where a sub-contractor has duties and tasks similar or identical to a permanent employee within a company then that person could well find themselves treated as an employee because the distinction between self-employed and employed status fades away," he warned. "And with employee status comes a whole raft of employee benefits such as unfair dismissal claims and other benefits such as maternity and paternity leave, holiday pay and pension entitlements."

Cyril said the ruling had proven that although each case had to be determined on its own merits, the proximity of the working relationship and control between Mr Tilson and Alstom Transport was the key factor and not issues of taxation, NI contributions or the way in which the company was billed.

In Tilson v Alstom Transport, it was shown that Tilsons working relationship was so closely identified with the company that he was effectively regarded as an employee. He held a senior managerial position as Fleet Health Manager, he was able to recruit and dismiss permanent members of staff, hire temporary contractors, buy equipment on behalf of the company and represent the company at both internal and external meetings. His name appeared on many internal documents and he had authorised access to confidential company information. He worked exclusively on a full-time basis for Alstom and had to ask for time-off for holidays in the same way that an employee would.

Having worked for Alstom as a Maintenance Technician between March 2003 and April 2004, he recommenced working for the company in August 2004 as a Technical Engineer at the Wembley depot. He was subsequently promoted to a senior managerial role as Fleet Health Manager working out of the Golders Green depot on a contract which was expected to continue up until 2017. However, in November 2006, his work was terminated summarily leading to his claim for unfair dismissal.

Speaking after the reserved judgment was obtained, Mr Tilson's Counsel, Mark Sahu, confirmed how important this ruling could be set to become.

"This case was made more intricate given the absence of any explicit contract document between Mr Tilson and Alstom Transport," he said. "However, the inclusion of specific terms, which assisted the Tribunal in determining that there was an implied contract of employment in existence, proved to be an important factor in my view."

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