[Thanks to Laurie Anstis of Boyes Turner who is standing in for Daniel Barnett during holiday absence, and to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]
Does an employer's reasonable belief that a contract is illegal, and a fear that he would be exposed to penalties provide a defence to an employee's claim for non payment of wages based on that contract?
No, says the EAT in Okuoimose v City Facilities. The question was whether the contract was illegal, not whether it was thought to be illegal.
The claimant was a member, by marriage, of the family of an EEA national. By virtue of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) she was at all times entitled to reside and work in the UK. But a Home Office stamp in her passport confirming this expired. She was then suspended from pay for a period until a confirmatory letter from the UK Border Agency was available. The claimant made a claim for unlawful deductions from pay over the suspension period under s 13 of the Employment Rights Act 1996. The employment judge held the contract was illegal and unenforceable during that time.
The EAT (HHJ McMullen) overturned this decision. The claimant was entitled to work in the UK at all times and this was not affected by the failure obtain a new stamp in her passport. It was therefore irrelevant whether the employer was behaving reasonably, or thought it was behaving reasonably, or that it was worried about penalties. The claimant's claim therefore succeeded.