Contractor wins landmark court case

A court case has found in favour of a contractor challenging his client, Hewlett Packard, to provide him with the same protection from unfair dismissal as the company's permanent employees.

The Employment Tribunal in Bristol decided that Mr Martin O'Murphy, who had spent six years at Hewlett Packard was actually an employee of the company, notwithstanding that he was paid through an agency and through his own personal service company. His contract stated that: 'The Contractor shall be under the control of the Client regarding performance and discipline and shall obey all reasonable and lawful instructions given by the Client'

The feasibility of such a legal challenge being brought by a contractor has been debated theoretically before, however, the implications of the case being found in favour of the contractor could have far reaching effects.

When handing down judgement in the PCG's Judicial Review on IR35, Judge Burton commented that although 'someone who was taxed under IR35 would not automatically be an employee, they could have a good case for arguing that they should be entitled to the rights of an employee.'

Martin O'Murphy v Hewlett Packard is the first Employment Tribunal case to raise this issue since Mr Justice Burton made the observation and it is also the first to involve the use of a personal service company as well as an agency.

John Antell, the barrister who represented the contractor in the case commented: "Many contractors want and have a genuine business relationship with their clients. Providing they have contracts reflecting this business relationship the client will not be at risk of an employment rights claim and the contractor will not be at risk of the IR35 tax. If, however, the client insists on treating a worker as if they were an employee, then the employer must expect that the worker will claim the rights of an employee as has happened in this case."