Under immigration rules, only employers face a penalty and/or criminal sanctions if they knowingly employ someone who does not have leave to remain in the UK. As such, the Court of Appeal held in Okedina v Chikale that employees who do not know that they are in breach of immigration law are entitled to enforce the provisions of their contract against their employer in a tribunal for breach of that contract.

Basic facts

Ms Okedina, who had previously employed Ms Chikale to look after her parents in Malawi, brought her to the UK in July 2013 to live and work as a domestic servant for her on a six-month visa. In November 2013 Ms Okedina applied, relying on false information, for an EEA family permit for Ms Chikale. This was refused, as was the appeal against the refusal. Ms Chikale was unaware of any of these applications and that, as a result, she was in breach of immigration rules from November 2013 onwards.

After being summarily dismissed in June 2015 when she asked for more money, Ms Chikale brought a number of tribunal claims, which were mainly contractual. Ms Okedina argued that, as her former employee did not have leave to remain after November 2013, these claims were unenforceable.

Tribunal and EAT decisions

The tribunal rejected this illegality defence and ordered Ms Okedina to pay just over £72,000, most of which related to unlawful deductions from wages. The EAT dismissed her appeal (see LELR weekly 563).

Ms Okedina appealed again, arguing that the statutory intention behind sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 was to preclude an employee, whose leave to remain had expired, from pursuing contractual claims against their employer.

Relevant law

Section 15 of the Act prohibits employers from employing someone if they do not have leave to remain in the UK. If they fail to comply with this section, employers have to pay a penalty of a fixed amount.

Section 21 states that it is a criminal offence for an employer to knowingly employ someone who does not have leave to remain in the UK.

Decision of Court of Appeal

The essential starting point, said the Court, was to identify the two bases on which a claim arising out of a contract can be defeated on the ground of illegality. The first was “statutory illegality” when a legislative provision renders a contract (or a provision within it) unenforceable. The second was “common law illegality” when the “formation, purpose or performance of the contract involves conduct that is illegal or contrary to public policy”.

Noting that the public policy intention behind the statute in this case was to prevent people from working illegally in the UK, the Court signalled that it was also to protect vulnerable foreign nationals from being exploited. Although they may sometimes know that their status is illegitimate, sometimes they do not as this case made clear. The Court held therefore that it could not always be in the public interest to construe sections 15 and 21 to mean that all contracts are rendered unenforceable just because the employee is working illegally in the UK.

In relation to statutory illegality, therefore, the Court held that neither section 15 nor section 21 prohibited someone from entering into a contract if they did not have the appropriate immigration status nor did it prohibit them from enforcing the contract. Although the law provides for a penalty to be imposed, that is only applicable to the employer.

In terms of the defence of common law illegality, the Court held that, as Ms Chikale was unaware that she was working illegally in the UK, there was nothing in case law preventing her from enforcing the terms of her contract.