The claimant was offered employment as an assistant solicitor which resulted in the agreement that he was treated as self-employed for tax reasons. Following the termination of his agreement, the claimant brought a claim for unfair dismissal.  The tribunal raised the issue of illegality and found for this reason that the claimant could not bring his claim.  The claimant appealed. 

  • The EAT held that in considering whether the contract was tainted with illegality, in this case where the contract itself was lawful when made but performed illegally with the claimant's knowledge, it requires for there to be express or implied misrepresentation to HMRC.
  • The fact that the claimant financially benefitted from the arrangement is of no consequence. The EAT remitted the claim to a fresh tribunal for rehearing to consider if the claimant had claimed self-employed status with HMRC knowing he was not entitled to do so.

Key point:  The employee's knowledge of the wrong-doing is clearly essential in determining whether an unfair dismissal claim can proceed in cases of illegality. 

Connolly v Whitestone Solicitors