Hounga v Allen and another

The Supreme Court considered whether the defence of illegality bars a statutory tort claim for unlawful race discrimination arising from dismissal where the employee had entered into an unlawful employment relationship. The court held that the illegality defence will only defeat a tortious discrimination claim if there is a sufficiently close or inextricable connection between the claimant’s illegal conduct and the claim such that the court would be required to condone the illegality. The court rejected the Court of Appeal’s conclusion that the illegality of the employment contract necessarily defeated the discrimination claim and gave significant weight to competing public policy considerations, including the protection of victims of trafficking and the United Kingdom’s international obligations.

Background and facts:

• The claimant, Miss Hounga, was brought from Nigeria to the United Kingdom in January 2007 under false documentation and lived and worked in the respondent's household as a child carer without pay for about 18 months.
• The Employment Tribunal found a contract of employment and upheld a complaint of unlawful discrimination in the form of dismissal, awarding compensation for injury to feelings; the Employment Appeal Tribunal dismissed a defence-based challenge to the contract findings; the Court of Appeal ([2012] EWCA Civ 609) set aside the discrimination award on the basis that illegality barred the claim.

Nature of the claim and procedural posture: Miss Hounga appealed to the Supreme Court against the Court of Appeal’s decision that the illegality defence defeated her statutory discrimination claim under the Race Relations Act 1976 (section 4(2)(c)) (subsumed into the Equality Act 2010, section 39(2)(c)). The complaint before the Supreme Court concerned only discrimination in relation to dismissal; other contractual claims had been dismissed below and were not pursued to this court.

Issues framed by the court:

1. In what circumstances does the defence of illegality defeat a statutory tort claim for discrimination by dismissal?
2. Whether the reliance test or the inextricable link test should be applied and how public policy and international obligations (including anti‑trafficking instruments and ECHR article 4) affect the analysis.

Reasoning:

• The court reviewed the development of the illegality defence: reliance test (Tinsley v Milligan), the inextricable link approach as applied in discrimination cases, and subsequent refinements.
• The majority concluded that when considering whether illegality bars a tort claim courts must identify the aspect of public policy underlying the defence and weigh it against other public policy considerations. Central to the enquiry is whether the claimant’s illegal conduct is so closely connected to the claim that permitting relief would undermine the integrity of the legal system.
• Applying those principles to the facts, the court held that the immigration offences and unlawful contract of employment provided the context for the discriminatory dismissal but were not so closely connected with the statutory tort as to bar it; the dismissal, and the abusive conduct leading to it, were separable from the claimant’s immigration offences.
• The court also regarded the protection of potential victims of trafficking and the United Kingdom’s international obligations (including the Palermo Protocol, the Council of Europe anti‑trafficking Convention and ECHR article 4) as a powerful countervailing public policy consideration against applying the illegality defence to defeat the discrimination claim.

Disposition: The Supreme Court allowed the appeal and restored the tribunal’s award in relation to discrimination on dismissal; the claim about pre‑dismissal harassment was to be remitted to the tribunal for further determination consistent with the judgment.

The appeal was allowed. The Supreme Court held that the defence of illegality did not bar Miss Hounga’s statutory tort claim of unlawful race discrimination in relation to dismissal because there was insufficiently close connection between her immigration offences and the discrimination tort to require denial of relief; the court also emphasised that public policy favouring protection of trafficking victims and compliance with international obligations weighed against applying the illegality defence.

Employment Tribunal upheld discrimination in relation to dismissal and awarded compensation. Employment Appeal Tribunal dismissed the defendant’s cross-appeal on the contract finding. Court of Appeal ([2012] EWCA Civ 609) set aside the discrimination award on the ground that illegality barred the claim. Supreme Court allowed the claimant’s appeal ([2014] UKSC 47) and restored the tribunal’s award in relation to dismissal; pre-dismissal harassment complaints remitted to the tribunal.