Hughes v. The Coupers Partnership Ltd (CPL) UKEAT 0078_16 has provided a reminder of the concept of illegality.
Mr Hughes was a commercial director of CPL from February 1999. He had a written contract of employment that set out his entitlement to a fully-expensed private car. As a result of government announcements changing car taxation, CPL withdrew the benefit of a company car.
CPL dismissed Mr Hughes after it considered that he had fraudulently claimed for business mileage. They found he had not in fact made the journeys in question. The parties gave different accounts to the Tribunal of what was agreed on withdrawing the car benefit. Mr Hughes' case was that he was entitled to make the expenses claims based on an agreement reached in 2002. He argued the company agreed he could claim £480 per calendar month (£5,760 a year), to compensate for the loss of the company car and fuel card. He agreed at a disciplinary hearing that he had not undertaken the journeys he claimed for and said they were to substitute for the loss of the company car.
The ET held the company fairly dismissed Mr Hughes. It found Mr Hughes' evidence to be inconsistent and unreliable compared to that of the company. Mr Hughes appealed to the EAT. The EAT dismissed the appeal, rejecting Mr Hughes' evidence that a variation to his contract had been agreed. Further, it found the ET was right to decide that if Mr Hughes' case was as he explained it, then the contract was tainted by illegality. The company was not accounting to HMRC for the expenses payments.
The courts will not allow an illegal contract to be enforced. An employee who knowingly collaborates with an employer in performing a contract illegally will be unable to bring an employment tribunal claim that relies on that contract. The courts have a duty to uphold the law and therefore even if neither party has raised the issue, because illegality is an issue of public policy, it will take precedence. This principle goes back as far as 1775. Lord Mansfield put it as follows: "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." This case is a more recent reminder of the Tribunal's approach to dealing with contracts tainted by illegality.