Lockheed tribunal shows danger of using ‘permanent’ contractor

IT services company Lockheed Martin is facing an employment tribunal after replacing a self-employed systems administrator with...

IT services company Lockheed Martin is facing an employment tribunal after replacing a self-employed systems administrator with five years’ service with a cheaper member of staff.

Tim Tremaine, who was hired to provide round-the-clock network support for secure government IT sites managed by Lockheed, is claiming compensation for alleged unfair dismissal after the firm failed to offer him redundancy or alternative work.

The case, which could set a legal precedent, highlights the potential risk IT departments face from self-employed contractors claiming the same rights as permanent employees.

Margaret Davis, head of employment law at Field Fisher Waterhouse, said that although the law is still developing, employers needed to be cautious.

"I would be very nervous if a client told me an individual [contractor] had worked at an organisation for five years, albeit on a contract that was continually renewed or through a personal services company," she said.

Tremaine filed a complaint with the employment tribunal after discovering an internal memo that appears to show that Lockheed did not renew his contract so that it could replace him with another contractor charging £10 an hour less.

In a memo shown to Computer Weekly, chief information officer Tom Dixon said Lockheed had found a cheaper replacement for Tremaine, called Dave.

The memo said, "Dave has quoted us an hourly rate approximately £10 an hour less than Tim’s current rate. Based on my experience with Dave’s work, which I rate as outstanding. I have given… direction to bring Dave on as a contractor as soon as possible."

Tremaine, who works through his one-man company, Yourlife, claimed he should have been offered the opportunity to renegotiate his rates or find alternative work within Lockheed Martin.

"I was shocked. I had been told every year, ‘Your contract will be renewed, we are very happy with your services.’ I was more shocked when I found out they had found someone cheaper," Tremaine told Computer Weekly.

Lockheed Martin said Tremaine was never one of its employees, but was employed by his own company Yourlife, under contract with recruitment agency Advanced Resource Managers.

"Since he was not an employee of Lockheed Martin, it would be inappropriate for us to comment pending litigation," said a company spokeswoman.

Andrew Brown, employment partner at law firm Herbert Smith, said it was important for firms to keep a sharp distinction between contractors and permanent staff if they are to avoid contractors claiming employment rights.

Tremaine said he had received letters from Advanced Resource Managers, which has offices at Lockheed’s Hampshire headquarters, attempting to persuade him to drop the case.

The company said, "We are dismayed by these allegations. Advanced Resource Managers supplied a contract to Yourlife, which clearly stated the contract end date. There has been no contractual breach."

Read more on IT for small and medium-sized enterprises (SME)