Breach of immigration rules does not render a contract of employment unenforceable

In the recent case of Okedina v Chikale, the Court of Appeal held that the contract of employment of a Malawian employee, whose leave to remain had expired, remained enforceable for the purpose of bringing contract-based claims in the employment tribunal.

Facts

Ms Chikale worked in the UK for Ms Okedina as a live-in domestic worker. Ms Okedina applied for a visa on Ms Chikale’s behalf which was granted for 6 months until November 2013. Ms Okedina then applied for an EEA family permit for Ms Chikale using false information which was refused, as was the appeal against the refusal. Ms Chikale remained unaware of this refusal and thereafter continued to work in the UK in breach of immigration rules.

In July 2015, Ms Chikale was dismissed and subsequently brought claims for unfair and wrongful dismissal, breach of contract and unauthorised deductions, breach of the Working Time Regulations 2006 and failure to provide written particulars of employment and an itemised wage slip. In defence of the claims, Ms Okedina argued that Ms Chikale’s contract of employment was illegal as she was in breach of immigration law by no longer holding leave to remain and that accordingly, any contractual claim was unenforceable.

The Employment Tribunal and Employment Appeals Tribunal rejected this defence of illegality noting that employers should not be able to rely on this defence after intentionally participating in illegality and that Ms Chikale had not knowingly engaged in any illegal performance of the contract. It further held that the contract was terminable upon six weeks’ notice and therefore was not ‘void from inception’, and therefore not in breach of immigration law.

Ms Okedina appealed the decision to the Court of Appeal.

Outcome

The Court of Appeal dismissed Ms Okedina’s appeal and noted that there are two distinct bases on which a claim under a contract may be defeated on the ground of illegality- statutory and common law illegality.

For statutory illegality, the key legislative provisions are ss 15 and 21 of the Immigration, Asylum and Nationality Act 2006 which provide for civil and criminal penalties on an employer when a foreign national works illegally. The Court of Appeal noted that these provisions do not prohibit the employment of an employee when they have no current leave to remain, but only impose a penalty on the employer for employing them. The Court then considered Parliament’s intention in enacting these provisions and decided that this was not to make a contract, concluded with an individual who is in breach of immigration rules, unenforceable. They further stated that public policy was not to deprive a vulnerable and innocent employee, without the appropriate immigration status, of all contractual claims against their employer. The defence of statutory illegality was therefore rejected by the Court of Appeal.

With regards to common law illegality, the court engaged in a consideration of whether the formation, purpose or performance of the contract involves conduct that is illegal and whether to deny enforcement of the contract is an appropriate response to that conduct. The Court noted that Ms Chikale relied on Ms Okedina to take care of her visa and relied on the case of Hall v Woolston Hall Leisure Ltd 2001 to uphold the tribunal’s decision that as she did not knowingly participate in any illegal performance of her contract, the contract remains enforceable.

Implications for employers

It is crucial that employers conduct right to work checks by carrying out a document check to confirm that employees and prospective employees have the right to work in the UK. A check enables an employer to benefit from the protection of a ‘statutory excuse’ in order to avoid a civil penalty for an illegal working offence under the Immigration, Asylum and Nationality Act 2006. The judgment reaffirms the position that not only can employers be liable for civil and criminal penalties for employing illegal workers, but that they could also be liable for contractual claims bought by an employee working in breach of immigration rules, as this does not automatically render a contract of employment unenforceable.

The law and practice referred to in this article has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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