Here‘s the reasoning that the courts gave for their verdict that Tilson was not an employee for Alstom and so could not be dismissed by them.
1. If there is a contract between contractor and agency that works then there is no need to create an implied one between contractor and client
2. If there is a sham clause in the contract it doesn‘t invalidate the whole contract and furthermore this is nothing to do with the end client as they are not signatories to it
3. It is not the job of the courts to rule in favour of implied contracts even if they don‘t like the relationship where clients use this hiring contracts via agencies to avoid direct employment
4. The fact that a contractor is fully integrated into a company is of no importance if the contract he or she has with the agency covers this. So what if they work the same hours as employees and work in the same way. It would make more sense for them to do this if they have to work with employees than do differently
5. Just because the Government want to tax contractors as employees doesn‘t make them employees under Employment Law
6. It is up to someone to prove that there is an implied contract. The initial assumption and status quo would be that there is none
7. Contractors, agencies and clients are free to have whatever contractual arrangements that they want to make provided the contract covers it all. This has priority over any implied contract and indeed there is no need to create one if the contract works
This is a major landmark judgment and it is binding at Tribunals and at EATs.
It is not binding on tax law but it undermines IR35 by saying that contractors are not disguised employees – which was the basis for IR35 in the beginning.
It would be perverse for the Government to say that they were disguised employees for tax purposes when the courts have said that they are not disguised employees for employment purposes.