Does Illegal working in the UK make contract of employment unenforceable?

In recent years, the UK courts and tribunals have resisted attempts by employers to use the "illegality defence" to block vulnerable migrant workers' employment tribunal claims.

While this case concerned contractual claims, employers should bear in mind that illegal working does not necessarily preclude a claim under the Equality Act 2010 (see case Hounga v Allen and another [2014] IRLR 811 SC).

Contract of employment | illegal working | enforceability

In the recent case in Okedina v Chikale [2019] EWCA Civ 1393 CA, the UK Court of Appeal held that a worker's former employer could not block her contractual claims by arguing that she was working without the required immigration status.

Mrs Okedina brought Ms Chikale from Malawi to the UK in July 2013 to work for her as a live-in domestic worker. She worked very long hours and was paid only £3,300 during her employment.

Ms Chikale was initially granted a visa to work in the UK. When the visa ran out in November 2013, Mrs Okedina told Ms Chikale that the necessary steps were being taken to extend the visa. Mrs Okedina made an application for a visa extension, forging Ms Chikale's signature and applying on the false basis that she was a family member. The application was refused.

Ms Chikale, who was unaware that she was working illegally, continued in Mrs Okedina's employment, but was dismissed in June 2015 after asking for more money. She brought a number of successful "contractual" employment tribunal claims, including claims for unfair and wrongful dismissal, unlawful deductions from wages, and unpaid holiday pay.

The Employment Appeal Tribunal upheld Ms Chikale's claims and Mrs Okedina appealed to the Court of Appeal. The sole point before the Court of Appeal was whether or not Mrs Okedina could raise a defence of illegality in respect of the period after November 2013. In other words, Mrs Okedina argued that the contractual claims could not succeed because the contract of employment was illegal once Ms Chikale's leave to remain expired.

The Court of Appeal noted that the contract of employment could have been unenforceable because of:
Statutory illegality. This is where legislation either prohibits the making of a contract so that it is unenforceable by either party or provides that a contract, or a particular contractual term, is unenforceable by one or other party. The knowledge or culpability of the party seeking recompense is irrelevant: it is a simple matter of obeying the legislation.

Common law illegality. This arises where the formation, purpose or performance of the contract involves conduct that is illegal or contrary to public policy and where the denial of enforcement of the contract to one or other party is an appropriate response to that conduct.

The Court of Appeal observed that, in most case law involving illegality in the employment field, the employee is well aware of their immigration status, although they may have sought to conceal it from the employer. Unusually, Ms Chikale was unaware of her immigration status and it was her employer concealing her true immigration status from her. For this reason, the only possible defence for Mrs Okedina would be "statutory illegality".

The Court of Appeal set out the two relevant statutory provisions: sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006. Section 15 imposes civil penalties on employers that employ illegal workers, although employers have a statutory excuse against liabilities for civil penalties if they carry out satisfactory right-to-work checks. Section 21 makes it a criminal offence to employ a person knowing that they are disqualified from employment because of their immigration status.
However, the Court of Appeal highlighted that the sections do not expressly prevent the parties from entering into a contract of employment where the employee does not have the appropriate immigration status, nor do they provide that such a contract should be unenforceable by either party. The sections do no more than provide for civil and criminal penalties, which are imposed only on the employer.

The Court of Appeal went on to consider whether or not an intention could be implied into sections 15 and 21 that a contract of employment where the employee does not have the appropriate immigration status should be unenforceable by either party. To imply such an intention, the Court had to consider "public policy in the light of the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations".

The Court of Appeal concluded that it would be going too far to imply such an intention into sections 15 and 21, where the effect would be that an innocent employee is deprived of all contractual remedies against the employer. The Court noted that the "common law illegality" defence remains available where the employee knowingly participates in the illegality.

The Court of Appeal rejected Mrs Okedina's appeal and upheld Ms Chikale's contractual claims.

This article and case should not in anyway meant to encourage illegal working in the UK but to advise potential victims regarding their employment rights.

Muchie Shamuyarira (Chartered Member of CIPD - UK)
HR & Industrial Relations Director and also Employment Law Consultant in the UK
Mobile: 077 2385 4713 Email: muchie@employment-rights.com website: www.employment-rights.com
If you have an Employment Related query in the UK, why not contact Muchie!!!!!