Law queries

One of my members has been working for a small employer and was recently dismissed. He admits that he did a deal with the employer to avoid paying tax and National Insurance. His employer now says that this means that he cannot take an unfair dismissal claim even though, on the facts, it is clear that this is what has happened. Surely the employer can get away with the dismissal.

The law says that whenever a contract is illegally entered into (for example by an agreement not to pay tax and National Insurance) neither side can enforce rights under it. According to the Employment Appeal Tribunal in a recent case, if an employee actively participates to profit from an illegal contract it is not enforceable even if the employer also gained from the arrangement. Many employers are aware of this and that is why they are happy to agree such terms. Unfortunately the courts say that the fact that the employer has benefited from the arrangement is not relevant.

* More information: Soteriou v Ultrachem EAT/0250/01