United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 478_94_0512

Appeal No. EAT/478/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 5 December 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR D A C LAMBERT

MR A D SCOTT

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MRS E PAULLEY          APPELLANT

MR K EASTWOOD          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant THE APPELLANT

IN PERSON


 


MR JUSTICE MUMMERY (PRESIDENT): This is a preliminary hearing of an Appeal by Mrs Elizabeth Paulley against the Decision of the Industrial Tribunal held at Norwich on 1 September 1993 and 26 January 1994.

For extended reasons notified to the parties on 12 April 1994, the Tribunal unanimously decided that, by reason illegality of the performance of the contract of employment to which both the Applicant and the Respondent were privy and on grounds of public policy, it would not be proper to entertain the applications before it. The Tribunal ordered that they be dismissed.

Mrs Paulley was disappointed with that Decision and appealed by a Notice of Appeal which was signed by her and dated 18 May 1994. The grounds of appeal attached to the Notice of Appeal raised two points: first, that the Industrial Tribunal, in finding that the Appellant was a party to the Respondent's alleged illegal performance of the contract of employment, erred in law in that it reached such a conclusion through testing the evidence given on an objective rather than a subjective footing. There were no findings of fact which support the Tribunal's findings that the Appellant had actual knowledge of the alleged illegal performance of the contract.

The second ground of Appeal was that, further or in the alternative, the Appellant contends that there was no evidence given to support a finding that she had acted illegally in the performance of her obligations under the contract of employment. The conclusion that it would not be proper to entertain the Appellant's application on the grounds of public policy was perverse.

The purpose of the preliminary hearing is to decide whether either of those points or any other points raised by Mrs Paulley in oral argument, reveal an arguable point of law which should be heard on full Appeal in this Tribunal. If there is no arguable point of law, then this Tribunal has no jurisdiction to entertain a full Appeal, since its power to hear appeals is confined to questions of law arising in the decisions of industrial tribunals.

The background to the claim is that Mrs Paulley presented an application to the Industrial Tribunal on 8 December 1992, in which she alleged that she had been unfairly dismissed from her employment as a waitress by the Respondent. She asked for compensation for unfair dismissal and for an order for repayment of holiday pay which had been unlawfully deducted.

She stated in her application that her normal basic hours per week were between 24 and 30 hours at a basic wage or salary of £2.30p an hour, giving an average take home pay of £90.91p based on an 41 1/2 hour week. She had had employment from May 1990 until 22 September 1992.

In her application she went on to give further details of her complaint. It is not necessary to set those out in view of the course that the proceedings took before the Tribunal.

The claim was contested by Mr Eastwood, the Respondent. He accepted that Mrs Paulley was dismissed and said that the reason for it was misconduct, bad time-keeping and sickness and behaviour which was not conducive to the establishment. The details of the defence were set out in the document attached to the Notice of Appearance.

Matters took an unexpected course when the hearing started before the Industrial Tribunal. It appeared to the Industrial Tribunal that there was a possible illegality in the performance of the contract. There was nothing unlawful in what Mrs Paulley was employed to do. She was lawfully employed to be a waitress in the Respondent's kebab and steak restaurant in Great Yarmouth. The question raised by the Tribunal, as stated in paragraph 2, was as follows:

"... 2. At the end of the first day of the hearing, both parties were informed by the Chairman that the Tribunal was particularly concerned about the contents of the Form P60 disclosed by the applicant's bundle since it appeared to be inconsistent with the evidence of both parties and about the continued receipt of Family Credit following an increase in wages. It was suggested that written evidence of the wages paid should be produced at the adjourned hearing. The Chairman further informed both parties that, without making any prejudgments, in cases where a contract of employment was tainted by illegality, as for example where there had been a collusive fraud on the Revenue, the Tribunal would have no jurisdiction to deal with the applications before them..."

The matter was adjourned and was further investigated at the adjourned hearing in the light of documents produced and oral evidence was given.

The Tribunal stated its findings of fact in relation to the proceedings. There were two important findings of fact. The first was that the Respondent was under-recording the wages paid to Mrs Paulley with the result that the Inland Revenue was deprived of the proper level of income tax and National Insurance Contributions arising from her employment. This was reached on the basis of evidence disclosed to the Tribunal that there were serious discrepancies between the evidence of the Respondent and his records. The Tribunal was also satisfied that false information was supplied by or on behalf of the Respondent to the Benefits Agency to support applications for Family Credit on a false basis.

On those findings of fact, Mrs Paulley does not raise any point. She says realistically that she is not really in a position to say what her employer was doing in relation to the records kept by him. The point which Mrs Paulley wished to challenge is the second finding of the Tribunal, that Mrs Paulley was a party to the illegal performance of the contract by the employer.

The Tribunal came to that conclusion for the reasons set out in paragraph 6 of the Decision. The Tribunal stated they were satisfied Mrs Paulley was a party to illegal performance because:

"... 6.1. having originally been given proper wages slips, she never raised any question as to why they were no longer provided and information as to hours worked and deductions made was not being given to her from about March 1991; notwithstanding this, the figures for average take home pay in paragraph 7 of her application, as well as her oral testimony to the tribunal, show an awareness of the distinction between gross and net wages;

6.2. at no point in her evidence did she suggest that her employer was paying her cash in hand on the basis that he would be responsible for her income tax and National Insurance contributions on the grossed up figure;

6.3. following her approach to the Benefit Agency during the first period of Family Credit, the applicant knew that changes in her wages during any period of grant would not affect that grant which would be based upon the evidence supplied by her and confirmed by her employer at the date she applied for it;

6.4 when pressed to reconcile her evidence in chief as to her hours worked with the evidence of the basis on which she put forward the second claim for Family Credit, she changed her evidence as to the hours she was working at the relevant time to support the basis on which that claim had been made; until then there had been no suggestion on her part that she was working a 24 hour week other than for the initial period of her employment before she started working full-time;

6.5 she was content on the occasion of the third claim at least to let the respondent's wife fill out and submit the claim form for her and it is inconceivable that she did this otherwise than on the basis that it would be submitted in such a form as to support her application although it was her evidence to the Tribunal that her hours of employment exceeded the hours put forward in the claim she had instigated;

6.6. the result of the second and third applications was that she received Family Credit without the reduction which would have been made had her true earnings been disclosed in her application..."

So the Tribunal did examine closely all the various aspects of Mrs Paulley's relationship with her employer and his activities and the Tribunal came to the conclusion, which is a conclusion of fact, that Mrs Paulley was, in those circumstances, a party to the unlawful performance of her contract of employment involving a fraud on the Revenue on relation to P.A.Y.E. and National Insurance Contributions.

The grounds of Mrs Paulley's Appeal, both in her Notice of Appeal and in her arguments to us today, are attempts to challenge those findings of fact. She has explained that she had not filled the form in; it had been previously signed by her and filled in by Mrs Eastwood (the employer's wife). She said that she was not given wages slips and that she did ask questions about it. She made a number of other points in relation to her unawareness of what was going on.

The difficulty with these points is this: those are points on the facts. The Tribunal heard evidence from Mrs Paulley and from her employer. They saw documents and they came to various conclusions about the credibility of the evidence. On the basis of the evidence, they came to two factual conclusions, which cannot be attacked on this Appeal. Our view is that there is no point of law raised by this Appeal that is arguable. It will be dismissed at this stage. It may be that Mrs Paulley is able to make some claim against her employer in another Court in respect of what has happened, but what she is not able to do is to pursue the case in the Industrial Tribunal, which has no jurisdiction to hear a claim based on a contract unlawfully performed and where the employee was a party to the unlawful performance. The Tribunal's Decision was right. There is no error of law. The Appeal is therefore dismissed.