Employment tribunal rules against rights for freelancers

The ruling, which overturned the original Employment Tribunal held in July 2009, gave independent contractor Mr Tilson, the opportunity to claim unfair dismaissal from Alstom Transport.

The original decision made by the tribunal was based around the fact that one specific clause in the contract between Mr Tilson's company and Morson International said that Tilson was not subject to Alstom's direction, supervision or control. However it was argued successfully that this did not actually happen. Therefore, the Employment Tribunal decided that the entire contract was a sham, thus entitling Mr Tilson to claim the same rights as he could if he had been an employee.

Alstom Transport opposed this decision and took their case to the Employment Appeal Tribunal. The appeal decided that one clause cannot make an entire contract null and void, and that the entire working relationship must be taken into consideration. Mr Tilson had ardently defended his status as an independent contractor throughout the contracted period and it was obvious that all parties concerned meant him to be an independent contractor right from the start.

Martin Hesketh, Managing Director of Brookson, said that the final ruling was the right result. He pointed out that the original tribunal did not look at the whole picture even though there was a contract defining Tilson as an independent contractor.

He went on to say that genuinely self-employed people should not only declare their status but also maintain it by ensuring they have a contract that states their working practices. It is vital to ensure that all parties understand and agree to the contract and contractors should seek advice from specialists regarding compliance with regulations such as IR35.

If the original ruling had been allowed to stand it would have given contractors the right to take advantage of flexibility and preferential tax treatments during assignments whilst at the same time allowing them to claim employee rights if the client terminated the assignment early. By changing employment status during the duration of a contract, HMRC would also be allowed to request the contractor to settle unpaid tax and NICs obligations.

Pinsent Masons, a leading employment law firm also agreed. A spokesman said that the decision for very helpful for both contractors and recruitment businesses. He stressed the need for an accurate contract to determine an individual's working status.

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