Illegal contract claim
Labour & European Law Review Weekly Issue 220 02 June 2011
If a contract is, in itself, illegal, employees cannot bring a claim alleging breach of contract. In Allen v Hounga, the Employment Appeal Tribunal (EAT) confirmed that as Ms Hounga was aware that her contract was illegal, she could not bring a claim of unfair dismissal or any other contractual claim but she could succeed in a claim of race discrimination.
Ms Hounga, who worked for the Aboyade-Cole family in Nigeria, was offered the chance to work in England with the family’s daughter (who lived with her husband in London). She was told that she would be able to go to school, that the family would pay for her trip and also pay her £50 per month if she looked after the children and did some housework.
Her employer then suggested that, in order to obtain the necessary travel documents, she should say she was a member of the family. So she swore a declaration before the High Court of Nigeria to that effect, and also incorrectly told embassy officials that the purpose of the visit (which she said was for six months only) was to see her grandmother.
Ms Hounga stayed with the family from January 2007 to July 2008 when she was dismissed. During that time she was subjected to serious physical and verbal abuse.
She brought claims of unfair dismissal, breach of contract, unpaid wages and holiday pay, race discrimination and loss of earnings.
The Tribunal dismissed most of her claims, saying that Ms Hounga was well aware of her immigration status when she arrived and that, when her visa expired in July 2007, she knew she was in the country illegally.
It concluded that, as the contract was illegal, she could not benefit from it and could not claim unfair dismissal, breach of contract, unpaid wages and holiday pay.
She succeeded in her claim of race discrimination, however, as the Tribunal said that the family would not have dismissed a hypothetical white British comparator. The Tribunal awarded her £6000 for injury to feelings along with some interest.
Relying on the case of Vakante v Addey and Stanhope School, Mrs Allen appealed the Tribunal’s finding on race discrimination, arguing that employees working illegally in the UK cannot bring discrimination claims.
The EAT upheld the Tribunal’s findings. It agreed that, as the employment contract was illegal, Ms Hounga could not bring a claim of unfair dismissal or any other contractual claim.
It also agreed that Ms Hounga had suffered race discrimination. It distinguished Vakante on the ground that the employer in that case was completely unaware that the employee did not have a permit compared to Mrs Allen who was more involved in the illegal activities than her former employee.
Finally, the EAT said that Ms Hounga was entitled to an award for injury to feelings because her discrimination claim was not "inextricably linked with the illegal conduct" and the Tribunal would not be condoning it by making an award.
However, she was not entitled to claim potential loss of earnings because she had never had the right to work here.
This case confirms the correct legal approach which is that, in discrimination cases the courts should consider whether the claimant’s claim arises from or is so clearly linked with the illegal conduct of the claimant, that the court could not permit the claimant to recover compensation without appearing to condone it.