Illegality

[Thanks to Laurie Anstis of Boyes Turner, who is standing in for Daniel Barnett. Thanks also to Fatim Kurji of No 5 Chambers for preparing this case summary]

Does a tribunal have to tell parties that it might find that the contract of employment is illegal prior to dismissing claims and counterclaims on that basis?

Yes, says the EAT in Sheibani v Elan & Co LLP.

The Claimant, a chartered certified accountant, was paid half of his salary through payroll, and the other half 'off the books' in order that both parties might save money. The tribunal did not accept any of the explanations given to it in the course of the hearing by the employer as to why that arrangement had been formed, nor by the employee as to why it had not been queried. Without informing the parties that it was considering the question of illegality, and therefore without hearing submissions on the issue, the tribunal concluded that the contract between the Claimant and Respondent was illegal and dismissed the claims for unfair dismissal, breach of contract and arrears of holiday pay, and the counterclaim for breach of contract.

In allowing the appeal the EAT noted that had the parties been aware of the issue of illegality the cross-examination would have been differently conducted; re-examination would have been different; the witness evidence may have unfolded differently and the submissions certainly would have taken a different approach. Further, the EAT noted that where potential criminal offences may be under consideration, it was an essential matter of justice and procedure that parties should be told by the tribunal of the right against self-incrimination. These failings amounted to more than just a procedural irregularity: they amounted to a denial of justice and accordingly the matter was remitted to a fresh tribunal for reconsideration.