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In Connolly v Whitestone Solicitors the EAT remitted an unfair dismissal claim for fresh consideration of whether C had claimed self-employed status with HMRC knowing he was not entitled to do so. This was the question that the tribunal should have addressed directly before finding that Mr Connolly was prevented from bringing an unfair dismissal claim by reason of illegality. |
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HHJ Richardson has sought to clarify what the Court of Appeal meant by ‘misrepresentation’ in Enfield Technical Services v Payne [2008] EWCA Civ 393.
The Claimant was offered employment as a solicitor but at his request was treated as self-employed for tax-purposes and paid his remuneration gross. Following termination of his engagement, he claimed unfair dismissal. He successfully proved that by the time of his dismissal he was an employee with qualifying service because of the way the relationship had changed.
In the EAT’s view, when a tax-payer claims self-employed status to the HMRC, he represents that he honestly believes he is entitled to such status. If he knows that he is not entitled to do so, but still proceeds to do so anyway, he misrepresents his own belief and acts in bad faith. It will be contrary to public policy to support his claim for unfair dismissal.
The EAT stated that the tribunal judge should only have found performance of the contract illegal if she had found that the Claimant claimed self-employed status knowing it was unsustainable to do so at the time.
The case considered the Court of Appeal’s decision in Enfield, that employees who are wrongly treated as self-employed for tax purposes are not necessarily precluded from claiming unfair dismissal by the doctrine of illegality. A finding of illegality in such circumstances is only possible if there was misrepresentation or an attempt to conceal the true facts of the relationship.
The EAT noted that it was clear from Enfield that a case will not come into this category merely because a claimant mistakenly chose or retained self-employed status – some form of misrepresentation is required.
The judge should have found performance of the contract to be illegal only if she found that C claimed self-employed status knowing it was unsustainable to do so. Such a serious finding should only be made after the matter has been put to the party 'fair and square' and their answer addressed in the reasons.
Click here to read the full judgement. Martin Budworth is happy to be contacted in chambers if there are any queries about the case.
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