The effect of illegality on unfair dismissal rights

An employee who actively participates in an illegal contract is likely to be barred from bringing a claim of unfair dismissal. This is not a denial of the right to a fair trial under human rights law (Soteriou v Ultrachem [2004] IRLR 870). Examples include:

• working illegally with no right to work in the UK (see Chapter 3); or

• actively misrepresenting your employment status to HMRC by pretending to be self-employed to avoid tax, when you know you are really an employee.

Employees have been allowed to bring unfair dismissal claims in cases where:

• their employer refused requests to arrange PAYE to pay their tax and National Insurance (Warp Technologies Holdings v Nunoo and Vermani EAT/0527/04);

• they were paid occasional sums cash-in-hand (Annandale Engineering v Samson [1994] IRLR 59); or

• the employee was uncertain or mistaken as to their true employment status, incorrectly self-identifying as self-employed (Grace v BF Components Limited [2005] UKEAT 0006/05/2809).