Appeal No. UKEAT/0325/06/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 5 October 2006

Before
HIS HONOUR JUDGE McMULLEN QC
MR R MANNERS
MR D WELCH

THE MAYOR AND BURGESSES OF THE LONDON BOROUGH 
OF HOUNSLOW	APPELLANT

MS E KLUSOVA	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Mr Jonathan Cohen
(of Counsel)
London Borough of Hounslow
Legal Services
The Civic Centre
Lampton Road
Hounslow
TW3 4DN	
For the Respondent	Mr T A Walker
(of Counsel)
Walkers Solicitors
6 Red Lion House of Lords Alexandra Road
Hounslow
TW3 1JS	

Summary
The Respondent dismissed the Claimant as she could not provide evidence of her lawful working status. The Employment Tribunal erred in holding that there was evidence of her having lawful status to work. 

HIS HONOUR JUDGE McMULLEN QC

1.	This case is about unfair dismissal when the reason given by the employer was that it had to comply with statutory restrictions, in this case, precluding the continued employment of a Russian who required a work permit.  The judgment represents the views of all 3 members.  We will refer to the parties as Claimant and Respondent.

Introduction
2.	It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal sitting at London (South), Chairman Ms S Jenkins, registered with reasons on 19 May 2006.  As here the Claimant and Respondent were represented by Mr Walker Solicitor and Mr Cohen of Counsel respectively.  The Claimant claimed unfair dismissal.

3.	The essential issues as defined by the Employment Tribunal were:-

	“4.1	The Respondent’s stated reason for the Claimant’s dismissal under section 98(2)(d) Employment Rights Act 1996 was that she could not continue to work in the position she held without contravention (either on her part or that of the Respondent) of a duty or restriction imposed by or under an enactment, in particular section 8 Asylum and Immigration Act 1996.  In the alternative, the Respondent pleaded that it had some other substantial reason justifying the Claimant’s dismissal, namely a genuine belief that to continue employing the Claimant would contravene an enactment (Response Form ET3 page 14).  Given the above reasons, the Respondent considered that the statutory dispute resolution procedures did not apply in this case (page 14).
4.2	The question for the Tribunal was – what was the reason for the Claimant’s dismissal, was the dismissal automatically unfair or otherwise unfair under the Employment Rights Act 1996.

4.	The Tribunal decided that the Claimant’s dismissal was automatically unfair for the Respondent had breached the statutory disciplinary procedures.  The Respondent appeals against that judgment.  Directions sending this appeal to a full hearing were given in chambers by Mr Recorder Luba QC.  
The legislation
5.	The relevant provisions of the legislation are found in a combination of employment protection and immigration statutes.  First, as regards unfair dismissals section 98(1) and (2) provide potential fair reasons for dismissal and included amongst those, although unusual in practice in our jurisdiction is section 98(2)(d) which provides as follows:-

“98	General
(2)	A reason falls within this subsection if it-
(d) 	is that the employee could not continue to work in the position which he held without contravention (either on his part or on what of his employer) of a duty or restriction imposed by or under an enactment.”

6.	Fairness is dealt with section 98(4) and procedural fairness by section 98A which requires a finding of automatic unfair dismissal where relevant procedures have not been followed.  The interface with immigration law comes via two provisions, the first is section 24 of the Immigration Act 1971 which says this:-

“Part 3 criminal proceedings 
24	illegal entry and similar offences
(1)	A person who is not [a British citizen] shall be guilty of an offence punishable on summary conviction with a fine of not more than [[level 5] on the standard scale] or with imprisonment for not more than six months, or with both, in any of the following cases…
(e)	if, without reasonable excuse, he fails to observe any restriction imposed on him under Schedule 2 or 3 to this Act as to his residence [,as to his employment or occupation] or as to reporting to the police [,to an immigration officer or to the Secretary of State].”

7.	Mirroring that personal responsibility is the provision in section 8 of the Asylum and Immigration Act 1996 which imposes responsibilities on an employer:-

 “(1)	Subject to subsection (2) below, if any person (“the employer”) employs a person subject to immigration control (“the employee”) who has attained the age of 16, the employer shall be guilty of an offence if-
(b)	the employee’s leave is not valid and subsisting, or is subject to a condition precluding him from taking up the employment.
(3)	The defence afforded by subsection (2) above shall not be available in any case where the employer knew that his employment of the employee would constitute an offence under this section.”

8.	A code of practice has been introduced by section 8A for the purpose of Ensuring that there is no race discrimination in the operation of those employment measures.  A code of practice was relied on by the Employment Tribunal but not cited to it.  The code of practice on the avoidance of race discrimination in recruitment practice this provides as follows:-

	“17.	It is lawful also to employ asylum seekers, provided they have written permission to work.  It is also lawful to employ, people awaiting the outcome of an immigration appeal who before their appeal had permission to work or people who were entitled to work and are awaiting the outcome of a request for an extension to that permission requested before it ran out.
19.	In order to establish a defence you need to make sure that, before a person starts working for you, you see at least one document which appears to you to be listed in Appendix 1.  You should ensure that the document is an original and that it appears to relate to the person that you are intending to employ.  You should make either a copy or record of the document or retain it.  This last option will normally only be appropriate in the case of Part 2 of P45.  The statutory defence is only established by checking documents before taking on a new employee.  There is no requirement to do anything else, even if the person’s permission to be in the United Kingdom is not yet permanent.  You should not ask existing employees to demonstrate that they have permission to work.”

The facts

9.	The Employment Tribunal set out the facts

“6.1	      The Claimant worked for the Respondent, the London Borough of Hounslow, from 13 November 2000 until she was dismissed on 10 August 2005.  She was employed firstly as a secretary and then as an administrative officer.
6.2	The Claimant had a Russian passport and had been living in the UK legally since September 1996 initially on student visas and then in May 1999 she was granted a visa which expired on 15 May 2004.
6.3	Prior to that date the Claimant made an “in time” application to the Home Office for indefinite leave to remain in the United Kingdom (page 142) and Mr Cooper was aware of the fact that the Claimant had made an application, as he wrote to the Home Office Work Permit Section on 5 May 2004 confirming her employment with the Council and in support of her application/appeal to remain in the United Kingdom (page 85).
6.4	At the Claimant’s request, on 14 September 2004 Mr Cooper wrote to the Claimant’s solicitors confirming the Claimant’s employment with the Council (page 86).  Mr Cooper was then absent from work due to sickness between 15 September 2004 and 4 February 2005.  On his return to work he telephoned Mr Walsh of the Council’s Benefit Fraud Investigation Team which assists the Human Resources Unit of the Respondent in determining queries on eligibility to work, requesting that Mr Walsh investigate the Claimant’s immigration status.
6.5	Mr Walsh contacted the Immigration Service who confirmed via e-mail on 1 March 2005 that the Claimant had no permission to work in the United Kingdom (page 88).  The Immigration Service advised Mr Walsh that the Claimant was in the United Kingdom without permission as her leave to remain had expired on 15 May 2004.  Further more the Immigration Service stated that there was no trace of any further application and therefore the Claimant was an “over stayer” from that date and was currently liable to be detained “under section 28A of the Immigration Act.”

Thereafter the police contacted the Claimant.  She was detained and released on conditions which we will come to shortly.  The immigration authorities confirmed to officers of the Respondent that the Claimant had the right of appeal against its decision and that she should not enter employment pursuant to the conditions.  There was internal communication between officers of the Respondent relating to the ability of the Claimant to undertake employment, but by 15 July 2005 Mr Walsh of the Respondent was told that she did not have permission to be in employment and this was confirmed again.  Written confirmation was required and it came in the form of the conditions which are known as IS96 attached to her release from detention.  

10.	In the light of that material, documentary evidence was sought from the Claimant as to her entitlement to work.  At all times the Claimant was represented by solicitors.  It has to be said that the correspondence by the solicitors did not disclose documentation specifically relevant to this issue.  Although the work permit had expired an application for indefinite leave to remain in the United Kingdom had been made but the Tribunal found no evidence of that being been made other than that assertion.  On 10 August 2005 the Claimant was dismissed by letter which said the following:-

	“I am writing to you regarding your right to work lawfully within the UK.  I have been advised that Mr Aidan Walsh, Fraud Investigation Officer contacted you on 27th July 2005 requesting documentary proof of your continued right to work.  I understand that you passed this request to your solicitor to respond.
On 28th July 2005 we received a letter from your solicitor regarding your immigration status who appeared to be unclear as to what evidence we required.  Mr Walsh wrote to your solicitor on 1st August 2005 clearly requesting documented evidence of your entitlement to undertake, employment within the UK whilst your application for indefinite leave to remain is being considered.
Your solicitor responded on 2nd August 2005 and again failed to provide evidence on your behalf of your right to work.
I must advise you that we have now received confirmation from the Home Office stating that you are prohibited from taking employment and advising us that you were aware of this.  They also provided a copy of the 1S96 ENF NW form issued to you on 17th March 2005 clearly stating that you are not permitted to work.
I therefore have to advise you that as you are ineligible to work within the United Kingdom that your contract with the London Borough of Hounslow will be terminated with immediate effect and you are summarily dismissed from your post of Admin Officer.”

She was advised of her right of appeal.  The Tribunal found that at no time was the Claimant consulted about the Respondent’s investigations and was unaware that she was about to be dismissed.  She was escorted to the exit of the building to ensure that she left and prior to the meeting when she was told about her dismissal, no Step 1statement pursuant to the statutory dispute resolution procedures was given to her.

11.	Further clarification was sought from the Home Office and on 23 November 2005 the Home Office wrote the following:-

	“Further to your letter dated 22 November 2005.  I confirm that your clients original leave of 15 May 2004 is deemed to be extended until the correct refusal is seemed to have been served.
As your client has a valid in time application with the Home Office for Indefinite Leave to Remain.  No action should be taken to remove her pending a decision on this case.
I regret Work Permits UK are not involved with making decisions on Indefinite Leave and all representations should be directed to the Home Office in Croydon.”

That is heavily relied upon by Mr Walker in these appeal proceedings and below.  

12.	The Tribunal found that the dismissal was unfair for there was no actual restriction upon the Claimant; that the code of practice had not been complied with; and that the Respondents had failed to comply with the statutory disputes resolution procedure before dismissing her.  It held that the belief by the Respondent that it could no longer employ her lawfully was not genuine.  It rejected a subsidiary defence, which was that even if it were lawful to employ her, the Respondent believed on reasonable grounds that it was not and that this constituted some other substantial reason under section 98(1).  On that basis therefore the dismissal was automatically unfair.

The submissions
13.	In opening the case for the Respondent, Mr Cohen focused on what he contended was a perverse decision by the Tribunal that the Claimant had made an in time application (see Reasons paragraph 6.3 cited above) and the finding in paragraph 7.1 which is as follows:-

	“7.1	Prior to the expiry of her visa on 15 May 2004, the Claimant made an “in time application” to the Home Office for indefinite leave to remain in the United Kingdom, in support of which Mr Cooper wrote to the Home Office Work Permit Section on 5 May 2004 confirming the Claimant’s employment with the Respondent.  This in time application was confirmed by the Home Office in its letter to the Claimant’s original leave was deemed to be extended until the correct refusal was deemed to have been served and that no action should be taken to remove her pending a decision on her case.”

14.	It is contended that there was no document to support such a finding and that this truly was perverse.  The documents relied upon by the Tribunal do not disclose an actual application being made, nor on an examination of the material saved by the Claimants’ solicitors is this apparent.  For example, the Home Office letter of 23 November 2005 does not say when an application was made for it to be validly in time, it being some 18 months later than it should have been, (the Claimant’s visa expired on 15 May 2004).  Correspondence from the Claimant’s solicitor contradicts the material, for it is said, in a letter of 22 November 2005, that an application for a work permit was made on 11 May 2004 and an application for an indefinite stay in February 2005.  

15.	Further, an application was acknowledged by the Home Office on 4 May 2005.  On 2 August 2005 the Claimant’s solicitors had said this, “what had happened in the mean time, is that our client’s work permit expired and an application was submitted early this year to the Home Office requesting indefinite stay”.  It is contended by Mr Cohen on behalf of the Respondent that the Tribunal had mistaken applications for indefinite leave with applications for a work permit and that there was no evidence of any application prior to 15 March 2004.  It is remarkable that no documentation survived.  Messrs Kapor, solicitors acting on other aspects of the Claimant’s case, had, as is apparent from the fax headers, produced documentation for the purpose of the Employment Tribunal proceedings indicating that they had not destroyed the documents and that they were within reach.  

16.	Following that submission as to perversity, a straightforward submission was made relating to the law.  It is accepted that reasonable belief is insufficient to establish a potential reason under section 98(2)(d) but there must be an actual breach.  By reference to the legislation which we have described above, there was no permission in place for the Claimant to work.  The position had been made clear by the “bail conditions” on Form IS96 as they have been described by both sides in this case, which include the following dated 14 March 2005 preceding the Claimant’s release on 17 March 2005:- 

“You may not enter employment paid or unpaid or engage in any business or profession any change of restriction.  If these restrictions are to be changed an immigration officer will write to you.  Although you have been temporarily admitted, you remain liable to be detained.  You have not been given leave to enter the United Kingdom within the meaning of the Immigration Act 1971”. 

17.	It was further contended that the Tribunal had failed to deal with the point that the arrangement between the parties was an illegal contract; and further that an argument as to frustration had not been dealt with.  In reply, Mr Cohen indicated a number of unsatisfactory responses given by Mr Walker during the course of the proceedings.  There was no finding by the Tribunal that the IS96 from which we have quoted was communicated to the Respondent by anyone other than the Home Office.  Indeed in correspondence addressed to the Respondent by Mr Walker, he said this:-
	“You will be aware that as a result of errors made by the Home Office our client was detained both of the local Police Station and in a Detention Centre for a few days until we were able to persuade the Home Office through our representations that our client should be released back to her home in Hounslow, which the Home Office acceded to on condition that our client attended the Local Immigration Office once a week to confirm that she was still residing at the same address.
Our client has dutifully complied with this request and no further problems have arisen in this regard.”

That was contended to be an inaccurate description of the conditions imposed since, while giving a full account of the Claimant’s adherence to the residence and reporting requirements, it did not, significantly it is said, point out that she was subject to an employment restriction.  

18.	On behalf of the Claimant it is contended that the Respondent believed at various stages that she was entitled to work and that the officers of the Respondent had led her into the belief that she was entitled to stay here and to work for it.  An application for leave had been made after the expiration of the original visa.  It was contended that there had been no consultation whatsoever and thus the procedure adopted by the Respondent, such as it was, failed to meet the standards of the statutory requirements.  The judgment of the Employment Tribunal was entirely justified and the documentation provided to the Respondent was inadequate.  Reliance on the code indicated that the Respondent had failed to carry out its duties pursuant to that code.  It was expressly accepted that the statement on page 81 was not relied on.  This says, ‘provided an applicant has permission to be in the UK when an application is made, he or she is legally entitled to remain here on the same conditions previously granted until the application is decided’.  It was also accepted that the basis of the Claimant’s release from detention in 2005 was expressly upon her own agreement through Mr Walker to the conditions albeit against the background that it would cost money to obtain the surety had she sought bail.  Nevertheless she agreed to the conditions.
The legal principles
19.	The legal principles to be applied in this case appear to us to be as follow.  It is common ground that the time for considering the obligation asserted in section 98(2)(d) is the time of dismissal.  The issue in this case is purely one of law.  Did the enactments relied on by the Respondent make it unlawful for it to continue to employ the Claimant?  Reasonable belief as to the application of such enactment is not relevant at this stage see Bouchaala -v- Trust House Forte Hotels Limited [1980] IRLR 382 EAT.  

20.	When the finding by the Tribunal is that section 98(2)(d) applied, the statutory procedures do not apply (see regulation 7).  We see good reason for that: where a criminal offence is being committed, it must be stopped forthwith.  An Employment Tribunal is to address all issues relevant to the findings which it makes and if it does not it will err.  A Tribunal which makes findings without evidence acts perversely.  The standard is high to succeed on appeal on a claim of perversity see Yeboah v Crofton [2002] IRLR 700.  The EAT can decide an appeal if it has detected an error of law and all the relevant material is available to it to make such a judgment without remission to an Employment Tribunal; otherwise remission is appropriate.

Conclusions
21.	We uphold the submissions of the Respondent in full and allow the appeal.  In doing so we accept Mr Cohen’s submissions consisting of professional criticism made advisedly and on instructions of the handling of this appeal by Mr Walker before us.  

The perversity point on the in-time application
22.	In our judgment this case truly is one which meets the standards of Yeboah v Crofton.  There was no material available to the Tribunal to uphold the assertion that there had been a valid application made in time to the Home Office, that is before 15 May 2004, for permission to stay and or to work.  We accept the submissions of Mr Cohen and his detailed passage through the documentations indicating where this finding might have come from.  The evidence upon which the Tribunal made the decision is simply not made out in the documentation.  It is extraordinary that whether the case was handled by Messrs Kapor or by Walkers no documentation exists either with them or by the Home Office to indicate that a proper application was made.  It was certainly not placed before the Respondent.  Thus we hold that the perversity point succeeds. 

The “bail conditions”
23.	At the relevant time, 10 August 2005, an immigration officer had imposed the conditions relating to release on what is effectively bail.  This document Form 1S96, although we have not been taken to the statutory background, indicates the power in the immigration officer to impose what are akin to bail conditions.  They are explicit.  They were handed on a form to the Claimant.  They were known to Mr Walker.  At no time were they disclosed by either of them to the Respondent. It was duplicitous for Mr Walker to write on behalf of his client that she had dutifully adhered to the reporting condition in the order without mentioning the fatal point which was that she was not allowed to work.  Of course, the Respondent knew this for it had been advised by the Home Office on 15 July 2005 in the following terms; 

“This woman is currently prohibited from taking employment, a fact she should be well aware of (please see the form) and the letter to her MP dated 20 May 2005, the Home Office has received no further correspondence on this issues since the letter.”  

24.	Although it is asserted by Mr Walker that applications had been made for release from the bail conditions, we have seen none, nor did the Employment Tribunal.  We do not understand how correspondence or telephone calls between officers of the Home Office and of Hounslow Council can change the conditions imposed by an immigration officer releasing an illegal immigrant.  Indeed that must have appeared clear to Mr Walker for he told us it was his advice to his client that she should not work, pursuant to the order which she had agreed as a condition for her release from detention.  Thus with those two documents in front of it, Ms Gallagher of the Respondent was operating on the basis the dismissal had to occur in order to put a stop to what was a contravention of an enactment.

25.	It follows that we hold that the Tribunal erred in its approach and we will substitute our judgment that the Respondent has proved, as it was obliged to do so under section 98, the reason for dismissal and that it was that the Claimant could not be employed without breaking the relevant statutory regime and creating offences for herself and for the Respondent.  That then leaves fairness under section 98(4).  It being clear that the statutory procedures do not apply, nevertheless it is contended that elementary standards of fairness do apply.  In this case this is an empty complaint for at all times the documentary material and the evidence shows efforts being made by the Respondent’s officers to coax out of her any material which would substantiate her claim that she was lawfully entitled to work.  None was forthcoming.  

26.	We accept the importance of the observance of statutory enactments in the field of criminal law and that an employer faced with knowledge of an illegal working relationship must put a stop to it forthwith.  We would regard this as a case where procedural steps can be attenuated and the steps taken by the Respondent are, we hold, within those which a reasonable employer could take pursuant to section 98(4) when dealing with the breach of the criminal law.  We will substitute a finding that the Claimant was not unfairly dismissed.

27.	If we are wrong about the application of the law to section 98(2)(d) then the dismissal was for some other substantial reason.  There has been no argument addressed to us orally today but this was fully canvassed in the skeleton arguments.  We would hold that there was, contrary to the finding by the Tribunal, a genuine belief held by the Respondent’s officers that the Claimant was incapable of being employed lawfully.  The material before Ms Gallagher when she made her decision points only in that direction.  It cannot be said that she was acting without a genuine belief in the truth of what she was doing and in our judgment this was a dismissal for some other substantial reason and was fair.  

Illegalit and frustration
28.	The Tribunal has not dealt with illegality and it ought to have done.  It was ventilated before the Employment Tribunal and the vehicle for this was the judgment of the EAT in Governing Body of Addey and Stanhope School v Vakante [2003] ICR 290 which relies applies the guideline judgment of the Court of Appeal in Hall v Woolston Hall Leisure Ltd [2001] ICR 99.  If follows that our analysis of the legal provisions would apply to make this an illegal contract in that the Claimant was engaged knowing that she was precluded by the terms of her immigration status from continuing to work.  However, all that can be said is that the Tribunal failed to make a judgment about that and if we are right in our analysis, this would be the inevitable conclusion.  

29.	Further, the Tribunal made no finding as to the application made to it by Mr Cohen that the contract had been frustrated by these events.  That is a matter simply of observation so as if this case were to be remitted, the Tribunal would have to deal with that.  It is not now necessary for us or the Employment Tribunal to decide it. 

30.	The appeal is allowed; the dismissal was not unfair.  [Respondent’s application for wasted costs refused].