Veitch Penny LLP - Exeter | Crediton, Devon

Case

Wheeler v Qualitydeep Limited (t/a Thai Royale Restaurant)
Employment Appeal Tribunal Decision - (14 April 2004)

Issues

(1) Contract of Employment
(2) Illegality
(3) Acquiescence

Facts

Mrs Wheeler was employed as a Chef by the Respondent company from November 1999 to January 2003. During her employment she only received two payslips (in March and September 2001), which showed that no deductions had been made for national insurance or tax. Mrs Wheeler asked her employer for her payslips and was advised that everything would be “straightened out” in January 2002.

She made a number of claims under various provisions of the employment protection legislation.

The Tribunal found that Mrs Wheeler’s husband had encouraged her to ask about the payslips but he was willing to acquiesce the situation and allow it to continue. He found that Mrs Wheeler initially innocently continued the arrangement but her husband chose to ignore the situation. This involved a benefit over 3 years for both Mrs Wheeler and the company and accordingly the Tribunal found that Mrs Wheeler must have known that something was wrong and that they had chosen to acquiesce. The Tribunal consequently found that her Contract of Employment was tainted with illegality and that Mrs Wheeler could not enforce her statutory claims.

Mrs Wheeler appealed on the basis that the Tribunal was wrong to attribute wrongdoing to her through the knowledge or acquiescence of her husband and that the absence of active participation by Mrs Wheeler herself rendered the decision incorrect. The mere knowledge of illegality it was claimed was in itself insufficient to render a contract unenforceable.

Decision

The Appeal would be dismissed. The Tribunal was entitled to find that the facts in the instant case demonstrated knowing acquiescence in the continuation of wrongdoing and that the Contract was illegal in its performance. Knowledge of and participation in the illegality were essential and these would depend on the circumstances of the case. Although described as acquiescence it was clear in this case that the employee had participated. The Tribunal had been correct to find that the Contract could not be enforced.

Comments

This decision suggests that there is a positive duty for the Inland Revenue to be notified, if an employee believes that tax and national insurance is not being paid, as failure to do so means that they cannot claim unfair dismissal. This seems particularly unjust for employees, and accordingly, there may well be grounds to appeal this decision.