Okuoimose v City Facilities Management (UK) Ltd (Jurisdictional Points : Fraud and illegality) [2011] UKEAT 0192_11_1309

EAT
Okuoimose v City Facilities Management (UK) Ltd (Jurisdictional Points : Fraud and illegality)
[2011] UKEAT 0192_11_1309 · 2011-09-13
[1]This case is about the suspension without pay of an employee whose employer thought she did not have the right to work and that her contract of employment was illegal. I will refer to the parties as the Claimant and the Respondent. Introduction[2]It is an appeal by the Claimant in those proceedings against a Reserved Judgment of Employment Judge O’Rourke sitting alone at Bedford on 3 February 2011 after a one‑day hearing. The Claimant was represented by Mr Sean Aughey, giving his services under the Free Representation Unit, and the Respondent by a consultant - and today by Mr Peter Collyer, Consultant.[3]The Claimant made a claim that she had suffered unlawful deductions from her pay contrary to s. 13(1) of the Employment Rights Act 1996 for a period from 8 July 2010 to 16 August 2010. The Respondent contended that the Claimant did not have the right to work in the UK during that period and that the contract of employment was unlawful and so could not be enforced by a claim under s.13.[4]The essential issue was whether the Claimant was entitled to be paid during the period of her suspension a sum amounting to £700.00. The Judge decided that the contract was illegal and disallowed her claim. The Claimant appealed and I gave directions sending this to a full hearing for it seemed to involve a novel point of law. The legislation[5]The legislation arises under treaty obligations. The Claimant’s husband is a Spanish national and the Claimant herself is Nigerian, who acquired rights by reason of being a member of Mr Okuoimose’s family. The European obligation arises under directive 2004/38/EC, which provides in relevant part as follows:
“Article 23 Related Rights Irrespective of nationality, the family members of a Union citizen who have the right of residence or the right of permanent residence in a Member State shall be entitled to take up employment or self‑employment there.” “Article 25 General provisions concerning residence documents 1. Possession of a registration certificate as referred to in Article 8, of a document certifying permanent residence, of a certificate attesting submission of an application for a family member residence card, of a residence card or of a permanent residence card, may under no circumstances be made a precondition for the exercise of a right or the completion of an administrative formality, as entitlement to rights may be attested by any other means of proof. 2. All documents mentioned in paragraph 1 shall be issued free of charge or for a charge not exceeding that imposed on nationals for the issuing of similar documents.”
[6]The Immigration European Economic Area Regulations 2006 , seeking to transpose that directive, provide as follows:
“13.— Initial right of residence (1) […] (2) A family member of an EEA national residing in the United Kingdom under paragraph (1) who is not himself an EEA national is entitled to reside in the United Kingdom provided that he holds a valid passport. […]” “14.— Extended right of residence (1) A qualified person is entitled to reside in the United Kingdom for so long as he remains a qualified person. (2) A family member of a qualified person residing in the United Kingdom under paragraph (1) or of an EEA national with a permanent right of residence under regulation 15 is entitled to reside in the United Kingdom for so long as he remains the family member of the qualified person or EEA national. […]” “15.— Permanent right of residence (1) The following persons shall acquire the right to reside in the United Kingdom permanently— (a) an EEA national who has resided in the United Kingdom in accordance with these Regulations for a continuous period of five years; (b) a family member of an EEA national who is not himself an EEA national butt who has resided in the United Kingdom with the EEA national in accordance with these Regulations for a continuous period of five years; […]”
[7]Separate from those provisions, which deal essentially with the rights of qualified persons, is the Immigration, Asylum and Nationality Act 2006 . It is directed at the consequences of immigration control for employers. Regulation 15 sets up a penalty for employing a person without the relevant entitlement to work:
“15 Penalty (1) It is contrary to this section to employ an adult subject to immigration control if— (a) he has not been granted leave to enter or remain in the United Kingdom, or (b) his leave to enter or remain in the United Kingdom— (i) […] (ii) has ceased to have effect (whether by reason of curtailment, revocation, cancellation, passage of time or otherwise), or […]”
[8]Implementing that domestic statute are domestic regulations the Immigration (Restrictions on Employment) Order 2007 , which require certain documentation to be provided. The facts[9]The Judge found the facts were not in dispute and so I will replicate them. “2. The Claimant is a Nigerian citizen, who commenced employment with the Respondent on 28 March 2010, as a cleaner at the ASDA store in Stevenage. 3. On her passport, there is a Home Office stamp stating that a “right of residence in the UK as a family member of an EEA national (Mr Okuoimose), who is resident in the UK in the exercise of a Treaty right, is hereby given, until 8 July 2010.” It is common to both parties that ‘residence’ implies, also, the right to work. 4. On 8 July 2010, the Respondent suspended the Claimant without pay and requested of her that she provide evidence of her eligibility to work in the UK. This situation continued until 16 August 2010, at which point payment of wages recommenced (‘the suspension period’). The Claimant stated that she had initiated an application to renew the permit on her passport. The Respondent themselves investigated the matter with the UK Border Agency (‘UKBA’) and were informed by letter of 12 August 2010 that, in respect of their request for confirmation of her entitlement to work, the Agency had “checked their records and cannot confirm that this is the case and therefore I cannot confirm that this individual is currently entitled to work in the UK on the basis of an outstanding application.” The letter went on to say that “unless your employee is able to provide you with appropriate evidence of their entitlement to work, you will not have a statutory excuse against liability for payment of a civil penalty for employing an illegal migrant worker.” 5. On 20 August 2010, the Respondent dismissed the Claimant, on the grounds of illegality. 6. Later that same day, the Claimant provided a letter to the Respondent from the Border Agency, dated 16 August 2010, stating that, until her “application has been decided by the UKBA, you will 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.” It further confirmed that “from 29 February 2008 this document (the letter) may form part of a statutory excuse against liability to pay a civil penalty under s.15 of the Immigration, Asylum and Nationality Act 2006 for employing an illegal migrant worker.” As a consequence, the Respondent, in effect, reinstated the Claimant and by letter of 24 August 2010, requested that she return to work that evening. 7. The Claimant appealed on 23 August 2010 (marked as received by the Respondent on 26 August 2010) against the decision to dismiss her and requested that she be paid the wages she was due during the suspension period. As previously stated, the Respondent had already rescinded the dismissal and they further stated in their letter of 25 October 2010 to the Claimant’s representatives that she had been reimbursed for the pay withheld during the period from the date of the Border Agency’s letter of 16 August 2010, to the 20 August 2010. 8. Thereafter, the Claimant was on sick leave and it seems (although neither issue is relevant to this claim) that she did not return to work for the Respondent.”[10]The only addition necessary is to cite the UKBA letter of 16 August 2010, which has this:
“Certificate of Application (for family members of EEA nationals, who are not themselves EEA nationals) Thank you for your application of 23 July 2010 for a Residence Card or Permanent Residence Card. Until such time as your application has been decided by the UK Border Agency, you will 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 United Kingdom.

(s) ”

[11]The Judge addressed himself to the law and came to a conclusion which he said was a matter of fact, which was that the contract of employment was illegal. Mr Aughey contends that that is a finding on a question of law and I agree. The Judge considered the failure of the Claimant to present a residence card as indicating that she was not at the relevant time a person entitled to work. He referred to the penalties regime, including Regulation 15 on the passage of time. It is common ground that the Judge made a typographical error in paragraph 23 when he referred to the 2006 regulations, for in paragraph 22 he had correctly referred to the 2007 Order, but nothing turns upon that.[12]The Judge considered that he should apply the judgement of the EAT Mummery J presiding in Bamgbose v The Royal Star & Garter Home [1996] UKEAT/841/95 and he came to the conclusion that a contract was illegal by statute during the period of suspension. It has to be said that that Judgment was at a preliminary hearing indicating the matter should be heard at a full hearing, and a full hearing appears never to have taken place. It is important to note what issue was sent to a full hearing:
“3. New evidence before the Tribunal was that the Applicant did not obtain permission to work in the United Kingdom until 27 January 1993. His employment before that date was illegal under section 3 of the Immigration Act 1971 and Rule 131 of the Immigration Rules. It is arguable that his contract of employment was tainted by illegality throughout but we prefer the Respondent’s alternative submission that the contract was severable and accordingly tainted by illegality until 27 January 1993 but not thereafter.”
The submissions[13]The Claimant’s case is that the Judge erred in failing to recognise that throughout the period of her residence in the UK she was entitled to work and she did not lose that simply by reason of her failure to obtain a new stamp in her passport on the expiry of the residence card, as it is called. The Claimant had a right. She was not granted permission as a matter of discretion and so at all times was entitled to reside and to work - the two going hand in hand.[14]The Respondent contended that there were problems for employers in relation to documentation if the Claimant did not present relevant material so as to ensure that the employer was seised of the necessary permissions. Apart from that, Mr Collyer did not contend that the analysis of Mr Aughey on the immigration statutes was incorrect but preferred to rely on the Judge’s decision. He accepted that irrelevant considerations in the determination of the contract as illegal were reasonableness of the employer, reasonableness of its belief and the existence of financial penalties for employing a person who lacked the relevant documentation. But he contended that the Judge had not been influenced by such matters. Discussions and conclusions[15]I prefer the argument of Mr Aughey. What he presented was a scholarly, well‑researched and cogent argument in favour of the Claimant, which I have no difficulty in accepting. The first issue is to decide what the effect of the UKBA letter was. It is common ground that this had an effect in regularising the Claimant’s position as far as her employer was concerned. The Respondent accepted that with effect from 16 August 2010 she was entitled to work and, therefore, removed the suspension and authorised payments thereafter to her.[16]The Judge omitted the full citation from the relevant part of the letter, which I have provided above. In my judgment, he erred in his interpretation this document. It is a certificate dated 16 August 2010. What it does is to provide retrospective recognition of the validity of the Claimant’s right to live and work in the UK from the date that the application for a residence card or a permanent residence card was received, that is 23 July 2010. On its face, the document allows the Claimant to work from 23 July 2010 at the very least.[17]Application of logic to this certificate requires recognition of the Claimant’s right to work from 23 July 2010. I agree that the document was not available to the employer until 20 August 2010 but then it had the effect of creating a right to work from 23 July 2010 and so it was unlawful for the Respondent not to so pay her, contrary to Employment Rights Act 1996 s.13. That is a simple solution to part of the case. I would go further. As a matter of construction the certificate does not give a date for the start of the right to work. There is just a reference to the date the application was received. There is no reference to the unarguable right to work up to the date in the passport, 8 July 2010, or to its then ceasing as a right. The right to work exists at all times up to the determination of the application. That was done on 20 August 2010 and at the same time the Respondent was excused any penalty from 29 February 2008.[18]But that is only Mr Aughey’s secondary position because his primary case is that the Claimant’s right to work, and therefore entitlement to full pay, did not depend upon the letters uttered by UKBA for she had always had the right. She had it by reason of her status as a family member of an EU national.[19]Persuasively Mr Aughey contends that the language of a person being granted leave to enter or leave to remain is different from the language of rights. Three categories of person have rights. They are UK nationals; nationals of an EEA state; and nationals of a non‑EEA state who are family members of a person who is. That status does not depend upon marks made in the passport. Further, the entry in the Claimant’s passport is consistent with what I hold to be the correct approach, which is in the language of rights and not of permissions, grants and discretion.[20]The central issue, therefore, is did the Claimant, at any time, cease to be a person who was entitled to work under Article 23 of Directive 2004/38? In my judgment, Mr Aughey is right that she had that status at all times and the application for a residence card or permanent residence card did not affect that right. After all, the Secretary of State must issue a residence card in respect of such an application. Further, that requirement on the Secretary of State is the implementation in the United Kingdom of Article 25. This precludes the possession of a residence card as a precondition for the exercise of an administrative formality.[21]Counsel invited me to apply the purposive construction approach in Marleasing [1990] ECR 1-4135 so as to indicate that it is not a requirement in the UK that a person have a residence card as a condition of obtaining work. He would be in a better position to argue this as a matter of direct effect. But the Respondent is not an emanation of the state. However, it does appear to me that there is force in Mr Aughey’s argument that the way in which the UK has transposed the general provision in Article 25 is by imposing a duty on the Secretary of State to issue a card upon application.[22]I accept Mr Aughey’s argument that the Judge here paid attention to two irrelevant considerations. At least it is common ground that whether or not the employer behaved reasonably, or thought it was behaving reasonably, and whether or not there were penalties to be incurred if it got it wrong, are irrelevant considerations. The division between the advocates is as to the effect of those irrelevant considerations on the Judgment. It is plain to me that the Judge was influenced significantly by both of those factors. In paragraphs 18, 21 and 23 there are references to reasonableness and penalties. I therefore hold that the Judge wrongly took into account two irrelevant considerations.[23]In addition, the Judge paid attention to the provision of the penalties in a way which did not admit any effective application to the Claimant. As I have indicated by the citation from the 2006 Act, penalties are there incurred where leave to remain in the United Kingdom has ceased to have effect by reason of the passage of time. That was cited specifically by the Judge in paragraph 21 and simply has no application here. For, as I have indicated, the Claimant was entitled to be here as of right and did not have leave to enter, nor did the leave to enter, even if she had it, expire with time. She had a right for as long as she met the condition of being a family member of Mr Okuoimose to be here and, therefore, any reference to s.15 is misplaced.[24]The Judge accepted the Respondent’s argument that it is necessary for the Claimant to produce evidence. That is not the law. The Claimant may apply for residence or permanent residence after five years and she will be granted a residence card - it is a stamp in the passport. That is sufficient evidence of her entitlement for all purposes. It is simply evidence; it is not the creation of such a right which exists independently of the stamp in her passport. The Judge was wrong, in my opinion, to have been influenced by evidential matters when discussing the statutory and treaty rights.[25]The agreed chronology in this case indicates that on 3 July 2010 the Claimant made an application to UKBA for permanent leave to remain. As I have indicated, that was not actually what she was required to do. She was entitled as of right to reside here permanently. The application was made before 8 July 2010 when the residence card, stamped in her passport, expired. However, that expiry did not affect the substantive underlying right of the Claimant, so long as she met the condition of being a family member of Mr Okuoimose to reside and work here. So, this contract was not illegal.[26]I accept the force in Mr Collyer’s concern on behalf of his client, who supplies labour to ASDA, that employers may be placed in difficulties if they do not have ready access to the paperwork. That is a different sort of regime and it does not affect the legality or otherwise of a contract of employment. In my judgment, the Judge erred in law in coming to the conclusion which he did.[27]Before Mr Collyer made his submissions the advocates were invited to say, if that were the case, where the matter should be decided. By consent both invited me, were this to be my view to substitute my Judgment for that of the Judge rather than remit it. That is a pragmatic and sensible solution. There is only one answer to this case, which is a question of law, no material would be forthcoming before the Judge and, since I have determined that as a matter of law the contract was not illegal for the reasons which were presented to the Judge, this matter can be decided in only one way, and I so decide it. There were unlawful deductions throughout the whole of the period.[28]The appeal is allowed and an agreed sum is substituted.