Illegal Contracts

Like many other forms of contracts, the validity of a contract of employment is challengeable if the contract in question is illegal. Contracts that are illegal come in many forms including: contracts to commit crimes or civil wrongs, contracts tending to promote corruption or contracts which are illegal by statute. The recent case of Okuoimose v Credit Facilities Management (UK) Ltd dealt with the issue of whether a "reasonable belief" that a contract was illegal would provide a defence to an employee's claim for non payment of wages.

The Claimant in this case was a Nigerian woman married to a Spanish man. She was entitled to reside and work in the UK as a result of the Immigration (European Economic Area) Regulations 2006. The Claimant's passport stamp however stated that her right of residence expired on 8 July 2010. The Claimant was suspended without pay on that date and the employer sought proof that the Claimant was entitled to work in the UK. They dismissed the Claimant on the grounds of illegality on 20 August 2010. The Claimant was able to provide a letter from the UK Border agency dated 16 August 2010 stating that she would be "treated for immigration purposes as a family member of a legally resident EEA national and, as such, you are free to live and work in the UK." After seeing proof of the Claimant's entitlement to work in the UK, the Respondent reinstated the...

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