Employment Appeals Tribunal (EAT) Removes Employee Contract Illegality Bar In Unfair Dismissal Cases

www.workrep.co.uk

In deciding two similar cases, PAYNE v ENFIELD TECHNICAL SERVICES LTD and GRACE v BF COMPONENTS LTD Judge Elias in the EAT decided to remove a long maintained injustice against workers who work according to contracts drawn up by their employers that defraud the Inland Revenue. Previous to this decision, even those innocently working according to illegal contracts would have no recourse to an employment tribunal.
In PAYNE v ENFIELD TECHNICAL SERVICES LTD, Payne made an allegation of unfair dismissal that was defended by the employer who said that as both sides had declared to the Inland Revenue that Payne was self-employed. According to the employer he was either truly self-employed, or he was working under an illegal contract. In both cases Payne should have no claim for unfair dismissal.
As ever, judge made law is something of a fudge and often open to being 'distinguished' from other cases, eg."(43.)In our judgment the essential feature of all the cases where there has been found to be illegality is that the parties have knowingly entered into arrangements which have to their knowledge represented the facts of the employment relationship to be other than that they really were."
In Hewcastle Catering Ltd v Ahmed & Anor [1991] where waiters who cooperated in double accounting by the management did not have their contracts declared illegal because they had not gained personally from the illegality, and also appeared as witnesses for the prosecution. This is despite their having knowingly participated in the illegality described in Tinsley v Milligan [1994]as depending on public policy and not being subject to the exercise of discretion by the court.
Whether they knew or not that what they did was illegal would be irrelevant in the eyes of the law, as ignorance of the law is no excuse.
There must be some form of misrepresentation, some attempt to conceal the true facts of the relationship, before the contract is rendered illegal for the purposes of a doctrine rooted in public policy.
It would be absurd if a contract were held to be illegal because the parties in good faith thought that it could legitimately be considered to fall into one legal category whereas in fact it fell into another.

---------------------------------------------------------------------------------

Lawyers routinely use the threat of high costs to intimidate workers into giving up their claims at an early stage in a case. Apart from the psychological impact on claimants, this tactic often works and workers do withdraw their claims. Those representing workers' interests need to bring political pressure to bear to end this. As is the case in the Small Claims Court, the use of legal professionals in employment tribunals should not be encouraged .

Costs Awards Should Have No Place In A Tribunal
write to your union & MP

Problem At Work?
Contact:- WorkRep - Free Employment Advice For Workers. We Represent At Tribunal

For further information regarding Costs at tribunal

Disclaimer: articles and information published by WorkRep are intended for general information purposes only. No representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of such information are made.
© Workrep 26 / 07 / 2007

Return to top News