Okedina v Chikale

The Court of Appeal dismissed the employer's appeal against findings of the Employment Tribunal and Employment Appeal Tribunal that an employee whose immigration leave had expired could recover contractual employment claims. The court distinguished statutory illegality (where a statute expressly or by necessary implication prohibits a contract) from common-law illegality (where public policy and the Patel v Mirza factors determine whether enforcement should be denied). It held that sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006, which impose penalties on employers who employ persons without leave, do not clearly imply that contracts of employment are unenforceable by either party. The tribunal's finding that the employee lacked the necessary knowledge to found a common-law illegality defence was decisive: common-law illegality was unavailable because there was no knowing participation in the illegal performance of the contract.

Background and parties:

• The appellant (employer) brought the respondent (employee) from Malawi to work as a live-in domestic. The employee's visa expired on 28 November 2013; the employer retained her passport, gave false information on applications, and the employee continued working after the expiry believing her immigration status was being dealt with.
• After dismissal in June 2015 the employee brought multiple claims in the Employment Tribunal for unfair and wrongful dismissal, unlawful deductions (including by reference to the National Minimum Wage Regulations 1999), unpaid holiday, breaches of the Working Time Regulations 1998, failure to provide written particulars and payslips, and race discrimination.

Procedural posture:

• The Employment Tribunal (judgment sent 21 October 2016) rejected the employer's illegality defence, upheld the employee's contractual claims and dismissed the discrimination claim. A remedy hearing in May 2017 awarded the employee £72,271.20.
• The employer's appeal to the Employment Appeal Tribunal was dismissed by HHJ Eady QC on 15 January 2018. Permission to appeal to the Court of Appeal was limited to the question whether sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 preclude contractual employment claims where leave has expired.

Issues framed by the court:

1. Whether statutory illegality applied so that sections 15 and/or 21 IANA 2006 impliedly prohibited contracts of employment entered into or performed when an employee lacked leave to remain, thereby rendering contractual claims unenforceable by either party.
2. Whether common-law illegality barred the employee's contractual claims because the contract was formed or performed unlawfully, applying the Patel v Mirza public-interest proportionality test and the Hall v Woolston Hall "knowledge plus participation" approach.

Court's reasoning and conclusions:

• The court reviewed the distinction between statutory illegality (dependent on statutory construction and clear implication) and common-law illegality (assessed under Patel v Mirza).
• On statutory illegality the court concluded that neither s.15 nor s.21 expressly prohibits contracts of employment, and that an implication that such contracts are unenforceable was not compelled by necessary inference. The court considered authorities (St John Shipping, Archbolds, Phoenix, Mohamed v Alaga) and emphasised that where a statute imposes penalties on one party only the court must be slow to imply a prohibition absent a clear indication from Parliament; public policy considerations include the position of innocent employees.
• On common-law illegality the ET had found that the employee did not know her leave had expired and had not knowingly participated in illegal performance. That factual finding was not challenged on appeal and, applying the Hall approach as informed by Patel, meant the defence of common-law illegality failed.

Outcome:

The Court of Appeal dismissed the employer's appeal. The court held that sections 15 and 21 IANA 2006 did not impliedly render employment contracts unenforceable and that common-law illegality was not made out because the employee lacked knowledge and knowing participation.

Appeal dismissed. The Court of Appeal held that sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 do not, by necessary implication, render contracts of employment unenforceable by either party where an employee's leave to remain has expired; and the common-law illegality defence also failed because the Employment Tribunal's unchallenged finding that the employee did not knowingly participate in illegal performance meant denial of enforcement was not justified.

Employment Tribunal (liability judgment sent 21 October 2016; remedy hearing May 2017 awarding £72,271.20). Employment Appeal Tribunal (HHJ Eady QC) appeal dismissed 15 January 2018. Permission to appeal to the Court of Appeal was granted limited to the statutory illegality question by Lewison LJ. Court of Appeal judgment [2019] EWCA Civ 1393 dismissing the appeal (31 July 2019).