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Barry Stanton,
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What is the effect of illegality on an employment contract?
08 February 2018

The worlds of immigration and employment law frequently touch upon each other, given an employer’s obligations under the Immigration, Asylum and Nationality Act 2006 to ensure that an employee has the right to work when they commence employment and not to employ persons who no longer have the right to work. The issue to be determined in Okedina v Chikale was the effect of subsequent illegality upon an employee’s right to bring claims against the employer. 

Miss Chikale was a Malawi national who was initially employed by Mrs Okedina in Malawi. She came to the UK as a domestic worker and was given a right to remain for 6 months. There was a contract in place from 2010 but in conjunction with her immigration application there was a new employment contract which was for an indefinite term, but terminable on 6 weeks’ notice.  

Miss Chikale remained working in the UK beyond 6 months. An application for her to remain in the UK as a family member failed. She continued working. There were then issues around her rate of pay and eventually Miss Chikale was summarily dismissed in August 2015. As a result she brought claims for arrears of pay, unfair dismissal and race discrimination.

The Tribunal found that Miss Chkiale had been a domestic worker for Mrs Okedina in Malawi between 2010 and 2013 when she came to the UK with Mrs Okedina. 

The Tribunal found that when the contract was entered into it was legal, subsequently it had been illegally performed but that Miss Chikale had not participated in that illegality. It did not accept that the treatment she received was on the grounds of her race but rather her precarious immigration status.       
It was argued that Miss Chikale’s contract was illegal from the ousted since it anticipated her working for more than 6 months. The EAT considered the relevant authorities and concluded:

  1. The 2010 contract was legal when it was entered into. Even if there were a new contract in 2013 that was not illegal at the outset, Miss Chikale had a right to work in the UK and the contract could be terminated by notice. It was not illegal (and therefore void) at the outset.
  2. The EAT considered the effect of illegality on a contract of employment contract. It noted that there were two types of illegality which render a contract unenforceable from the outset.
    (i)    where the contract is entered into with the intention of committing an illegal act;
    (ii)    where the contract is expressly prohibited by statute.

Neither of these were relevant. However, there was a third category of case where a party may be prevented from enforcing it; which is a contract that is lawful when made, is later illegally performed and the party knowingly participates in the illegal performance. 

Here the Tribunal had been satisfied that Miss Chikale was not involved in the illegal performance of the contract and was therefore able to rely upon the contract. 

This case is important since it re-emphasises the fact that an employer will not be able to avoid liability on a contract which is performed illegally by the employer, perhaps because appropriate deductions are not made for tax, if the employee is not complicit in those acts. It also means that employees in similar situations will be able to bring discrimination and other claims against an employer, even if the contact is being performed illegally.   

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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