Illegal contracts

Case 4: The facts

Geoffrey Nunoo and Rahim Vermani worked for a US-based software company which planned to set up business in the UK. They were paid from the US and worked from home.

When they raised concerns that their employer was not paying tax and National Insurance (NI) contributions, Nunoo and Vermani were told that a UK company would be set up which would deal with this. Although a company was set up, Nunoo and Vermani were dismissed before it started trading.

The company said they could not pursue claims for unfair dismissal, as the failure to make the deductions had made their contracts illegal.

The ruling

The Employment Appeal Tribunal noted that Nunoo and Vermani had raised the issue of tax and NI deductions, and had been led to believe that their position would be regularised. Therefore their contracts were not tainted with illegality and they were entitled to bring proceedings against the employer.

Warp Technologies Holdings v Nunoo and Vermani UKEAT/0527/04