Okedina v Chikale

Statutory provisions penalising an employer for employing a person without the requisite immigration status do not, without a clear and necessary implication, render the employment contract unenforceable by either party. The court must construe the legislation by reference to its language, scope, purpose, public policy and the consequences for an innocent party.

Where an employment contract is performed illegally, common law illegality does not bar an employee’s claim unless the employee knowingly participated in that illegality. The public-interest approach in [2016] UKSC 42 is consistent with that employment-specific rule.

The claimant, a Malawian domestic worker, continued working for the appellant after her visa expired. The appellant retained her passport, falsely assured her that an extension was being pursued and concealed the failure of the immigration process. After her dismissal, the claimant succeeded before the Employment Tribunal on contractual and employment claims, receiving an award of £72,271.20.

The Employment Appeal Tribunal dismissed appeals against the liability decision and refusal to reconsider it. Permission for the present appeal was limited to whether sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 prevented an employee from pursuing contractual claims arising after her leave to remain had expired. The appellant also maintained a subsidiary defence of common law illegality.

1. Appeal dismissed. Sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 did not impliedly prohibit the employment contract or render it unenforceable by either party. Underhill LJ gave the leading judgment. Nicola Davies LJ agreed, and Davis LJ agreed while adding short reasons.

2. Statutory illegality depends on the proper construction of the legislation. In the absence of an express prohibition, a contract should be treated as unenforceable only where a clear implication or necessary inference shows that Parliament intended that result. A unilateral prohibition or penalty does not itself invalidate the contract. The court must consider the statutory language, scope and purpose, the mischief addressed, public policy and the consequences for an innocent party.

3. Sections 15 and 21 imposed civil and criminal consequences on the employer. They neither prohibited both parties from entering an employment contract nor declared such a contract unenforceable. Although preventing work by persons without the necessary immigration status was an important public policy, some employees could be innocent, mistaken or vulnerable to exploitation. Parliament could not be taken to have intended, by necessary implication, to deprive every such employee of all contractual remedies.

4. Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] QB 216 did not govern the case. Its statutory language expressly extended to carrying out insurance contracts, whereas “employing” did not necessarily prohibit performance of every obligation under an employment contract. Its liability regime also differed materially. Mohamed v Alaga & Co [2000] 1 WLR 1815 established no universal rule that a prohibition directed at one contracting party necessarily invalidates the agreement for both.

5. The common law illegality defence also failed. The public-interest approach in Patel v Mirza [2016] UKSC 42 was consistent with the established employment rule in Hall v Woolston Hall Leisure Ltd [2001] ICR 99. For an employment contract performed illegally, the employee’s knowledge and participation remain decisive. The Employment Tribunal had found that the claimant neither knew of nor participated in the illegality. The Employment Appeal Tribunal therefore correctly upheld the enforceability of her claims.

1. Court of Appeal (Civil Division): The employer’s appeal was dismissed. Sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 did not render the employment contract unenforceable, and common law illegality was not established.
2. Employment Appeal Tribunal: HHJ Eady QC dismissed the employer’s appeals against the original liability decision and the refusal to reconsider it on 15 January 2018.
3. Employment Tribunal: The tribunal rejected the illegality defence, upheld the claimant’s contractual and employment claims, dismissed her discrimination claim and subsequently awarded £72,271.20.