Connolly v Whitestone Solicitors UKEAT/0445/10

Mr Connolly was offered employment as an assistant solicitor with Whitestone but instigated a discussion which resulted in an agreement that he would be treated as self-employed for tax purposes and paid gross.  Following the termination of his engagement, he claimed unfair dismissal.   

The employment judge raised the issue whether the contract was tainted by illegality.  As Mr Connolly wished to be engaged on a self-employed basis as it benefited him financially had he deliberately mis-categorised the nature of the relationship?  If so, this illegality in the performance of the contract meant that public policy prevented him from pursuing his claims.  Mr Connolly appealed.  There was no express or implied misrepresentation beyond the character of the relationship to HMRC.  The judge should have found the performance of the contract to be illegal only if Mr Connolly claimed self-employed status knowing it was unsustainable to do so.  As the judge had not addressed the key question of whether Mr Connolly knew it was unsustainable to claim self-employment status the case was remitted to a fresh tribunal for a re-hearing. 

Key point:  A tribunal will not lend itself to hear a case if the contract is illegal and the employment claims will fail.  The parties should agree at the outset the nature of their relationship.