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Unfair dismissal: why Alstom Transport won

The Court of Appeal’s decision that Alstom Transport was not guilty of unfair dismissal against Mr Tilson, overturning the original Employment Tribunal decision in July 2009, gives welcome guidance if you use agency workers.

As you probably know, for people to pursue unfair dismissal claims against you they must first be an ‘employee’ working under a contract of service or apprenticeship. Although this sounds obvious and fairly clear-cut, it isn’t always the case and the Tilson V Alstom Transport situation was particularly complicated.

The Facts of the case:

Mr Tilson provided services to Alstom Transport as an independent contractor. However he was not paid by Alstom Transport directly, instead, he was paid by a separate service company which in turn was paid by a recruitment agency. Two contracts existed, one between the recruitment agency and Alstom Transport (in relation to Mr Tilson’s services) and one between the recruitment agency and the service company (in relation to his payment).

Although Mr Tilson acted like an employee of Alstom Transport, for example, he was supervised by its managers, had to apply to his line manager to take holiday and even supervised Alstom Transport staff, fundamentally he had no contract of employment with them. In fact, on two occasions, Alstom Transport asked Mr Tilson to become an employee but on each occasion, he declined because he preferred to be an independent contractor.

When Alstom Transport terminated Mr Tilson’s services, he pursued an unfair dismissal claim. The key question for the tribunal was whether or not Mr Tilson had been employed by Alstom Transport for the purposes of the Employment Rights Act 1996.

Although the Employment Tribunal and the Employment Appeal Tribunal originally concluded that Mr Tilson was an employee of Alstom Transport, the Court of Appeal reversed their decisions and held that Mr Tilson was not an employee of Alstom Transport and therefore was not eligible to claim unfair dismissal.

A significant factor in this decision was the intentions of the parties and that, despite Alstom asking Mr Tilson on a number of occasions if he would become an employee, he rejected these requests. These intentions were also evidenced in the contract between the recruitment agency and Alstom, which attempted to prevent a relationship between ‘employer and employee’ from arising.

This is a helpful reminder that a worker’s integration into a company, no matter how deep, does not automatically mean he or she is an employee and other factors should be considered, such as the intentions of the parties, which may be evidenced in the contract of employment.

It is clear that this high profile decision could stop people pursuing unfair dismissals cases in the future – welcome news to many businesses.

This also underlines the importance of businesses being clear about their intentions in relation to whether agency workers are considered employees or not. Open and honest communication between all involved will be persuasive evidence in relation to whether an employment relationship exists or not.

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