Blog - 13/08/2019
Can an illegal contract of employment be enforced?
Yes, in some circumstances, according to the Court of Appeal’s ruling in Odekina v Chikale  which establishes that businesses can be held to account for breaching employment contracts, even where their employees are working illegally.
The Respondent, Ivy Odekina, brought the Claimant, Judith Chikale, to the UK to work as a live-in domestic worker. Odekina had applied for a visa for Chikale who was given a six-month visa however she continued to work for Odekina after her visa had expired in November 2013. Odekina applied for a visa extension in Chikale’s name but that application was refused; Chikale was not made aware of that refusal and she continued to work for Odekina until June 2015 when she was summarily dismissed.
Chikale consequently brought claims for unfair and wrongful dismissal, unlawful deductions from wages, unpaid holiday pay, breaches of the Working Time Regulations, failure to provide written particulars and itemised payslips, and race discrimination.
The Employment Tribunal had to consider whether Chikale’s employment contract was unenforceable and therefore incapable of supporting contract-based claims because it was illegally performed since Chikale’s visa had expired in November 2013. This so-called “illegality defence” was unsuccessful before the Employment Tribunal which ordered that Odekina pay Chikale in excess of £72,000 by way of compensation. Odekina subsequently brought an appeal against the Employment Tribunal’s decision, but this was rejected by the Employment Appeal Tribunal.
Odekina then appealed to the Court of Appeal; however, the appeal was dismissed. The Court reviewed two forms of illegality capable of rendering a contract unenforceable: common law illegality and statutory illegality. It held that common law illegality (essentially, the parties entering into an illegal contract) did not apply in this case because of Chikale’s lack of knowledge that her visa had not been renewed meaning she had not knowingly participated in any illegal performance of her contract.
As to statutory illegality (the fact that statute requires permissions to work in the UK), the key issue before the Court was whether the fact that Chikale’s employment was in breach of the Immigration, Asylum and Nationality Act 2006 meant that her contract was unenforceable. In its analysis, the Court noted that s.15 and s.21 of the Asylum and Nationality Act 2006 provide for civil and criminal penalties to be imposed on anyone who employs a person who does not have leave to remain. Referring to public policy and the intention of Parliament when imposing the civil penalty regime for illegal working, the Court could not accept that public policy required a construction of these sections that would have the effect of depriving an innocent employee of all contractual remedies against the employer, thereby concluding that the Employment Tribunal was right to reject the statutory illegality defence.
What should employers be doing now?
Employees’ rights under a contract of employment are still enforceable even if they are working illegally in the UK apart from where they knowingly participate in an illegal contract. Employers should therefore be reviewing their workplace policies to ensure compliance with immigration rules. Failure to do so could attract serious civil and criminal penalties, as stipulated under s.15 and s.21 of the Asylum and Nationality Act 2006 as well as contractual and statutory claims by employees notwithstanding contractual illegality.
If you have any questions regarding this topic, please contact Linky Trott, or any other member of the Employment team.
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