Group CTO denied unfair dismissal claim after consultancy period excluded from service
A group chief technology officer who worked for a company via his own limited company before becoming an employee was unable to claim unfair dismissal because his continuous service fell short of two years.
2 min read · Last updated 18 May 2026
Case details
- #consultancy-agreement
- #service-company
- #continuous-employment
- #sham-contract
- #preliminary-issue
Key facts
- The Claimant worked for the Respondent from April 2019 until 31 March 2022, initially via a consultancy agreement between his company Lifelyne Dot Com Ltd and Telmar Communications Ltd.
- From 1 March 2021, the Claimant entered into a direct employment contract with Telmar Europe Ltd.
- The Claimant was dismissed for gross misconduct and claimed unfair dismissal.
- The Respondent argued the Tribunal lacked jurisdiction because the Claimant had less than two years' continuous employment.
- The Tribunal found the consultancy agreement was genuine and not a sham, and the Claimant had only one year of employment from 1 March 2021.
- The claim was dismissed for lack of jurisdiction.
Timeline
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Consultancy agreement signed
Lifelyne Dot Com Ltd agreed to provide the Claimant's services to Telmar Communications Ltd under a consultancy agreement.
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Employment contract commenced
The Claimant entered into a direct employment contract with Telmar Europe Ltd, resigning from Lifelyne.
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Dismissal
The Claimant was dismissed for gross misconduct with effect from 31 March 2022.
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Preliminary hearing
A preliminary hearing was held to determine whether the Tribunal had jurisdiction due to insufficient qualifying service.
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Judgment on jurisdiction
The Tribunal found the Claimant did not have two years' continuous employment and dismissed the unfair dismissal claim.
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Costs hearing
A hearing was held to determine the Respondent's application for costs.
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Costs judgment
The Claimant was ordered to pay costs of £14,412.
The legal issue
The tribunal had to decide whether the claimant had two years' continuous employment with the respondent or a related company, given that for the first part of his engagement he worked through his own limited company under a consultancy agreement.
The outcome
The tribunal dismissed the unfair dismissal claim for lack of jurisdiction.
- The claimant worked as a Group CTO from April 2019, but until March 2021 his services were provided through his own company, Lifelyne Dot Com Ltd, under a genuine consultancy agreement.
- He became a direct employee of Telmar Europe Ltd on 1 March 2021 and was dismissed for gross misconduct on 31 March 2022 — just over one year later.
- The tribunal found the consultancy arrangement was not a sham; the claimant chose it for tax reasons, used his own equipment, set his own hours, and had other clients. Therefore, only the period from March 2021 counted, giving him less than two years' service.
Lessons & takeaways
- If you work through your own limited company, that period will not count towards the two-year qualifying service for unfair dismissal unless the arrangement is a sham.
- Check whether your contract is genuinely a consultancy or employment — factors like control, equipment, and exclusivity matter.
- If you later become an employee, your continuous service starts from the employment contract date, not the earlier consultancy period.
- Seek legal advice before agreeing to a consultancy arrangement if you value employment rights like unfair dismissal protection.
When a consultancy arrangement costs you your employment rights
This case shows how the structure of your engagement can have a significant impact on your statutory employment rights. The claimant, a Group Chief Technology Officer, worked for Telmar Europe Limited and its group companies for three years — but only one of those years counted as continuous employment for unfair dismissal purposes.
The reason? For the first two years, he provided his services through his own limited company under a consultancy agreement. The tribunal found this was a genuine arrangement, not a sham designed to avoid employment rights. The claimant had chosen it on his accountant's advice for tax efficiency, used his own equipment, set his own hours, and even worked for other clients.
What the employer did right — and what the claimant could have done differently
Telmar Europe Limited successfully argued that the tribunal lacked jurisdiction because the claimant had less than two years' continuous employment. The company had clear documentation — a consultancy agreement that was negotiated and signed by both sides, invoices from the claimant's company, and evidence that the claimant understood the nature of the arrangement.
The claimant could have sought to have the consultancy period recognised as employment by ensuring the contract reflected the true working relationship. Factors like control over work, integration into the business, and exclusivity can point towards employment. But here, the claimant's own choices — using a limited company, working from home, having other clients — undermined his case.
Why this matters for similar claims
This decision is a reminder that the two-year qualifying period for unfair dismissal is strictly applied. Workers who start via a consultancy or agency arrangement should be aware that only direct employment counts towards that service. Even if you work for the same company for years, a change in contracting method can reset the clock.
The case also highlights the importance of preliminary hearings on jurisdiction. Even if you have a strong unfair dismissal case on the merits, it will be thrown out if you cannot show two years' continuous employment. Anyone considering a claim should check their employment history carefully and seek advice if there are gaps or changes in their contractual status.
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