Tilson v Alstom Transport

The Court of Appeal considered whether an agency worker could be treated as under a contract of service with the end user so as to confer jurisdiction on the Employment Tribunal to hear an unfair dismissal claim. The court restated that the onus is on the claimant to prove that it is necessary to imply a contract of employment and that the necessity test (drawing on The Aramis and related authority) must be satisfied. A high degree of integration and day-to-day control are relevant but not determinative of the existence of a contract where a genuine agency arrangement exists. Although clause 3.1 of the contractor contract misdescribed the level of supervision, the Court held that that misrepresentation did not, of itself, make the contract between the agencies a sham nor justify implying a contract of service with Alstom. The parties’ deliberate decision to avoid a direct employment relationship, and the absence of a common intention to create such a contract, were powerful factors against implication.

Background and parties:

The appellant, a technical engineer later promoted to Fleet Health Manager, provided services at two Alstom depots via a chain of agency arrangements and alleged that his summary removal by Alstom amounted to unfair dismissal. He claimed a contract of service with Alstom so as to give the Employment Tribunal jurisdiction.

Procedural history:

• The Employment Tribunal found the appellant was integrated into Alstom and implied a contract of employment.
• HH Judge McMullen QC, sitting in the Employment Appeal Tribunal, overturned that decision.
• The appellant appealed to the Court of Appeal.

Nature of claim / relief sought: The appellant sought to establish a contract of service with Alstom so that his unfair dismissal complaint could proceed.

Issues framed:

• Whether it was necessary to imply a contract of service between the appellant and Alstom given the existing quadripartite contractual arrangements.
• Whether clause 3.1 of the contract between agencies was a sham such that the contractual framework should be disregarded.
• Whether the Employment Appeal Tribunal was entitled to substitute its decision for that of the Employment Tribunal.

Court’s reasoning and conclusion:

• The court reiterated established principles: claimant bears the burden of proof and a contract is implied only if necessary to give business reality, not simply because conduct looks like employment. The Aramis necessity test and authorities such as Ready Mixed Concrete and James v Greenwich guided the analysis.
• The Employment Tribunal’s finding of substantial integration and control was accepted as fact, but the Court emphasised that integration and control can be consistent with an agency supply arrangement and are of limited weight when deciding whether a direct contract exists at all.
• The contract between Morson and Silversun contained clause 3.1 denying end-user control; that clause misdescribed the reality, but the Court concluded that misrepresentation of that clause did not invalidate the whole agency documentation or convert the relationship into one of employment with Alstom. Alstom had not itself given undertakings inconsistent with the contractual terms.
• The appellant’s deliberate refusal on multiple occasions to become an Alstom employee, and the absence of a common intention to create a contract on the appellant’s terms, were significant factors against implying a contract.
• Although the EAT must not lightly substitute its view for the Employment Tribunal, on the facts and law the Court agreed with the EAT’s conclusion that no contract of service existed between the appellant and Alstom; accordingly the appeal was dismissed.

Appeal dismissed. The Court held that, applying the necessity test for implying a contract, there was no proper basis to imply a contract of service between the appellant and Alstom. Integration and control did not outweigh the parties’ contractual framework and their clear intention to avoid a direct employment relationship; the misdescription in clause 3.1 did not render the agency arrangements a sham sufficient to create an employment contract.

Employment Tribunal: found an implied contract of employment (jurisdiction to hear unfair dismissal). Employment Appeal Tribunal (HH Judge McMullen QC, UK/EAT/0358/09): allowed Alstom’s appeal and held there was no contract of service. Court of Appeal ([2010] EWCA Civ 1308): dismissed the appellant’s appeal and upheld the EAT conclusion that no contract of service existed.