Out-Law News | 02 Aug 2019 | 11:35 am | 1 min. read
Organisations can be held liable for breaching employment contracts even if their employees have been working in the country illegally, according to the Court of Appeal in London.
The ruling by the court should prompt employers to review the policies and practices they have in place for complying with immigration rules, employment law expert Louise Shaw of Pinsent Masons, the law firm behind Out-Law, said.
The case before the Court of Appeal concerned a dispute between two Malawian women.
According to the ruling, Judith Chikale was brought to the UK by business owner Ivy Okedina in 2013 to work for her as a live-in domestic worker. After being summarily dismissed from her job in June 2015 Chikale raised a series of claims against Okedina before the employment tribunal.
Chikale's claims included unfair and wrongful dismissal, unlawful deductions from wages, unpaid holiday pay, breaches of working time law, failure to provide written particulars and itemised payslips, and race discrimination. Okedina argued, though, the contractual claims made by Chikale were unenforceable since Chikale had been working in the country illegally since her visa had expired on 28 November 2013.
Okedina's so-called 'illegality defence' was unsuccessful before the employment tribunal. She was ordered to pay Chikale more than £72,000 in compensation, including £64,000 for unlawful deductions from wages. The employment appeal tribunal subsequently rejected an appeal brought by Okedina against the lower tribunal's decision. Okedina then submitted an appeal concerning the application of the illegality defence to the Court of Appeal, but it has now confirmed that the defence did not apply in this case.
"This case is confirmation that where an employee is found to have been working illegally, their employer may still be liable for a breach of contract," said Shaw. "This case was somewhat unusual as the employer had submitted false information in a visa application for her without her knowledge. The Court of Appeal found that Chikale had not known that performance of the contract was illegal, which may have influenced its view that the employer could not then argue that they did not owe the employee wages."
Shaw said that the court also referred to public policy and the intention of parliament when imposing the civil penalty regime for illegal working. The court indicated that there is a general principle that an employee’s rights under an employment contract are still enforceable even if they are working in contravention of the immigration rules, she said.
"Many employers operate a policy of 'suspension without pay' where an employee’s right to work in the UK is in question," Shaw said. "While this may assist in answering to the Home Office, employers should ensure that any period of suspension is kept to a minimum as there is a risk of liability for unpaid wages. Wages for work already completed by the employee should never be withheld."