Elias P. has handed down a judgment clarifying (and possibly weakening) the illegality doctrine in the combined cases of Enfield Technical Services v Payne / Grace v BF Components Ltd.. And about time too - rigid application of the illegality doctrine has historically caused manifest injustice to employees. This is a case where it is well worth reading the full decision.
The EAT declines to follow cases such as Salvesen v Simons, and holds that in order to defeat an unfair dismissal claim on grounds of an illegal conract of employment, there must be "some form of misrepresentation [or] some attempt to conceal the true facts of the relationship" (para. 49). The fact that parties have wrongly labelled the relationship, or have entered into an arrangement which has the effect of depriving the Inland Revenue of tax to which it was entitled in law, is not enough to render the contract unlawful.
This brings the doctrine of illegality for unfair dismissal closer into line with how it operates in discrimination cases since the Court of Appeal's decision in Hall v Woolston Leisure Services.
I understand that permission to appeal is to be sought in both cases.
[Thanks to Ed McFarlane of Mentor (representing Enfield Technical Services) for telling me about this case]
Friday, 27 July 2007
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