If a contract of employment has been performed illegally, the employee cannot enforce any rights under it. In Robinson v Al Qasimi, however, the Employment Appeal Tribunal (EAT) held that they can enforce their rights (such as bringing an unfair dismissal claim) once the breach has been rectified. 

Basic facts 

When Ms Robinson was hired in 2007, her letter of appointment stated that she would be paid a gross salary of £34,000 and that she was responsible for paying the tax on it.

In 2014, it transpired that she had not done so. She argued that this was because she was an employee and not self-employed. Although the Crown Prince disagreed, he started deducting an amount from her monthly payment on 1 July 2014 which equalled her tax and national insurance contributions in case she was ultimately found to be his employee.

Between 2014 and 2017, a number of letters and emails were exchanged between Ms Robinson’s advisors and those acting on behalf of the Crown Prince in relation to her employment status. During that time she alleged that he had failed in his legal duty to operate a PAYE scheme for her and other employees.

In 2017, she was dismissed allegedly because of her failure to pay her tax. Ms Robinson claimed that it was because she had made a series of protected disclosures about the Crown Prince failing to operate a PAYE system. She brought a number of claims including unfair and wrongful dismissal.

Tribunal decision

The tribunal held that Ms Robinson was not dismissed because she had made protected disclosures but rather because she wanted the Crown Prince to pay her outstanding tax bill. If she had suffered a detriment, it was not because she had blown the whistle.

Although she had been unfairly dismissed (there should have been one further meeting before dismissal) and wrongfully dismissed (she should have been given 10 weeks’ notice), she was not entitled to enforce her contract. This was because she had performed the contract illegally by failing to pay her own tax, contrary to the clause in her letter of appointment.

Ms Robinson appealed on a number of grounds, but the central question was whether the contract had been performed illegally.

EAT decision 

With regard to the period between 2007 and 2014, the EAT agreed with the tribunal that the contract had been performed illegally. Not only did it explicitly state that she would be paid a management fee of £34,000 a year, it also expressly provided that she was responsible for paying tax on that payment. Unbeknown to the Crown Prince, she decided not to declare the income and not to pay tax. As such, she knowingly performed the contract illegally during that period.

From 2014 onwards, however, the contract was no longer being performed illegally. Instead there was a dispute between the parties as to whether she was an employee or a self-employed person and therefore who was liable to pay income tax and national insurance contributions on her annual payment.

The EAT held that, although Ms Robinson continued to refuse to accept that the tax and contributions had to be taken out of her agreed remuneration, that did not lead to the illegal performance by her of the contract. Given those circumstances, the tribunal was wrong to conclude that there was illegality in the performance of the contract after 1 July 2014, which would justify refusing to allow Ms Robinson to enforce the contract and the statutory rights arising out of it.

As such, she was entitled to bring claims for unfair and wrongful dismissal for the period from 2014 to 2017.