Wheeler v Qualitydeep Ltd. (t/a Thai Royale Restaurant)

The Court of Appeal allowed an appeal against an Employment Appeal Tribunal decision which had upheld an Employment Tribunal finding that the claimant could not enforce her employment rights because her contract was "illegal". The court applied the principles in Hall v Woolston Hall Leisure Centre Ltd and held that a contract is not rendered unenforceable simply by illegal performance unless the employee knew of the facts making the performance illegal and actively participated in that illegal performance. The Employment Tribunal had failed to apply the correct test and had not made the necessary findings of fact. The Employment Appeal Tribunal also erred in refusing peremptorily to consider procedural complaints about the adequacy of the factual findings and the evidence available.

The court therefore quashed the Employment Tribunal decision and remitted the matter for a hearing on the merits.

Background and parties: The appellant, Mrs Laong Wheeler, a Thai national with limited English, was employed as a cook by QualityDeep Ltd (trading as Thai Royale Restaurant) from 18 November 1999 to 28 January 2003. She brought claims including unfair dismissal and that the employer failed to provide payslips contrary to section 8 of the Employment Rights Act 1996. The employer did not take part in the proceedings, being in liquidation.

Procedural history: An Employment Tribunal sitting at Sheffield dismissed the appellant’s complaints on the basis that it could not allow enforcement of what it found to be an illegal contract. The Employment Appeal Tribunal dismissed the appellant’s appeal. The Court of Appeal heard the appellant’s further appeal.

Issues:

• Whether the Employment Tribunal was entitled to conclude that the contract was unenforceable because it had been performed illegally;
• whether the tribunal applied the correct legal test set out in Hall v Woolston Hall Leisure Centre Ltd — namely that illegality of performance renders a contract unenforceable only where the employee knew of the facts making performance illegal and actively participated in that illegal performance;
• whether the EAT was correct to refuse to consider challenged factual matters and alleged omissions in the tribunal’s findings on the basis of non-compliance with the EAT Practice Direction.

Court’s reasoning: The Court of Appeal held that the Employment Tribunal had not distinguished between illegality of the contract and illegal performance, had not applied the Hall test and had not made the requisite findings that the employee knew of the facts rendering performance illegal and actively participated in them. The tribunal’s factual findings (limited English, assistance by husband, ambiguous payslips, length of the arrangement and alleged acquiescence) were insufficient as a matter of law to support unenforceability. The EAT had also been wrong to refuse summarily to consider complaints about the adequacy of factual findings under the Practice Direction without proper assessment. Given the limited and uncertain factual findings, the Court concluded that the correct course was to quash the tribunal’s decision and remit the case for a hearing on the merits rather than direct final relief.

Appeal allowed. The Court of Appeal held that the Employment Tribunal applied the wrong test for illegality and failed to make necessary factual findings (in particular knowledge of the illegality and active participation) as required by Hall v Woolston Hall Leisure Centre Ltd. The Employment Appeal Tribunal should not have peremptorily dismissed the appellant’s procedural complaints under the Practice Direction. The Employment Tribunal decision was quashed and the matter was remitted for a hearing on the merits.

Employment Tribunal (Sheffield) decision dated 29 October 2003 (originating decision dismissing complaints); Employment Appeal Tribunal dismissed the appellant's appeal by order dated 16 April 2004; Court of Appeal allowed the appeal [2004] EWCA Civ 1085 (30 July 2004).