San Ling Chinese Medicine Centre v Ji

A contract of employment is not tainted by illegality merely because immigration-related conditions may have been breached. Illegality depends on the applicable legal restriction and, where a lawful contract is performed unlawfully, the employee’s knowing and active participation in that illegality.

An unchallenged finding that a graduate could work without a restriction on hours justified the conclusion that full-time work was lawful. Payment below the salary stated in a work-permit application did not automatically make the employment unlawful or establish that the employee knowingly participated in illegality, particularly where there was no collusion in obtaining the permit.

The Respondent appealed against an Employment Tribunal decision holding that the Claimant’s contract of employment was not tainted by illegality. The Claimant, a Chinese national, had worked for the Respondent after graduating while holding a student visa, and later held a work permit stating an annual salary of £18,000 although she received less.

The Employment Tribunal found that she was entitled to remain in the United Kingdom for a year after graduation without an hours restriction. It also found that she had not colluded in any false declaration to obtain the work permit and had signed an agreement for different remuneration under pressure. The issues were whether the Tribunal had erred in law or reached a perverse conclusion.

1. Appeal dismissed. The Employment Tribunal did not err in law or reach a perverse conclusion in holding that the contract was not tainted by illegality.
2. The governing principles were those applied in Hall v Wollston Hall Leisure Limited [2000] 4 AER 787. A contract is unenforceable where it is entered into for an illegal purpose or is prohibited by statute. Where a lawful contract is performed illegally, unenforceability requires both knowledge of the facts making the performance illegal and the employee’s active participation. Whether participation is sufficient is a question of fact.
3. The Tribunal’s unchallenged finding was that the Claimant had graduated before beginning the employment and was entitled to remain for a further year without the student-visa restriction on working hours. The Respondent therefore failed to establish an error in the conclusion that the employment before the work permit was obtained was not unlawful. The possible application of the Immigration Directorate Instructions did not alter that conclusion on the findings made.
4. The Tribunal also found that the Claimant had not colluded with the Respondent in declaring a salary of £18,000 to obtain the work permit. That finding was not appealed. The fact that she later received less than the stated figure did not automatically make the contract unlawful. R (Jimmy Ocheing) v Secretary of State for the Home Department [2008] EWHC 3302 (Admin) illustrated that a discrepancy in pay did not automatically lead to revocation of a work permit.
5. Signing an agreement providing for lower or differently calculated remuneration did not, on the Tribunal’s findings, establish knowing participation in illegality. The agreement was signed after the permit had been obtained, and the Tribunal found that the Claimant had not participated in any misrepresentation used to obtain it. The appeal was accordingly dismissed.

• Employment Appeal Tribunal: dismissed the appeal against the Employment Tribunal’s decision.
• Employment Tribunal: held that the Claimant’s contract was not tainted by illegality. It later upheld claims including automatic unfair dismissal and awarded £12,037.38. An application for review was refused, and no appeal was brought against that refusal.