Contractor loses unfair dismissal case claiming employment rights

In a recent adjudication (IRN November 2019) an IT Consultant lost his case of unfair dismissal – he had claimed that he was an employee and had developed a ‘continuous employment’ with the company.

This IT consultant had been working with this company supplying services as an independent contractor commencing in 1998 but claimed that – over time – ‘the relationship morphed into a contract of service’. He was their main IT person when he started providing services, but the business changed and grew, and by 2002, the services he was offering were full-time and he claimed that he was an integral part of the business.

In defence, the company stated that the individual had never been offered a contract of employment, and that they ceased his contract for services in August 2016.

The contractor stated that he took the same Christmas holidays as all the staff and gave all his available working time to the company. He did not sub-contract his work to anyone else, apart from one occasion, and he dealt with issues when he was away and/or on holidays.

He also stated that the cost of a training course was re-reimbursed by the company.

The Company argued that they always paid the individual on the basis of his invoices, and that he was registered for VAT. He had no entitlement to holidays/leave, and that he provided the same service to more than one business. He was not involved in team meetings (although he claimed that he was their main IT person), and never stated that he was an employee, until his services were terminated.

He was also paid a higher rate than any employee and had his own laptop and mobile phone.

The Adjudicator found that this was not a clear case as ‘each employment situation differs, and each case has to be dealt with on the basis of its particular merits, having regard to existing case law’.

In reaching her decision the Adjudicator stated that one of the points that was important was that the individual was paid ‘considerably more’ than the other IT personnel working as employees, and also he was registered for VAT, even thought this was at the request of the respondent. The adjudicator did not accept that there were such changes of significance that fundamentally altered the relationship between the parties.

This is a very interesting case highlighting the need to be very careful in determining a contract for services with a service provider versus a contract of service with an employee.

Voltedge can provide advice and support to employers in working through similar issues. We’d love to talk to you about how we can assist, call Ingrid on 01 5252914 or email to speak to an expert.

Voltedge Management