THE INDUSTRIAL TRIBUNALS

CASE REF:	1110/11

CLAIMANT:			Thomas McMahon

RESPONDENT:		Natasha Delaney

DECISION (ILLEGALITY ISSUE)
The unanimous decision of the tribunal is that, although the claimant’s contract of employment was performed illegally, the tribunal is not deprived of jurisdiction to entertain the relevant claims.

Constitution of Tribunal:
Employment Judge:	Employment Judge Buggy		
Members:			Mr I Lindsay
				Mrs M Galloway

Appearances:
The claimant was represented by Mr B McKee, Barrister-at-Law, instructed by O’Reilly Stewart Solicitors.
The respondent was not present or represented.

REASONS

1.	The claimant was employed in Drennan’s Restaurant at University Road, Belfast for approximately three and half years.  On 9 April 2011, he was dismissed.

2.	In these proceedings, the claimant made a claim of unfair dismissal against the respondent and he also made a claim in respect of the right to be provided with a written statement of reasons for dismissal.

3.	Both of those claims were successful.  In a decision which was issued on 18 May 2012 (“the Main Decision”), this tribunal unanimously decided as follows:

	“(A) 	The claim of unfair dismissal against Natasha Delaney is well-founded and it is ordered that Mrs Delaney shall pay to the claimant the sum of £12,162 compensation in respect of that unfair dismissal.

	(B)	The claimant is entitled to pursue a claim in these proceedings in respect of his right to be provided with [a] written statement of reasons for dismissal; that claim against Natasha Delaney is well-founded; and it is ordered that Mrs Delaney shall pay to the claimant the sum of £1,000 in respect of that claim”.

4.	That claim was the subject of an unsuccessful application for review, which was made to this tribunal pursuant to Rule 34 of the Industrial Tribunal Rules (“the Rules”).

5.	That review application was the subject of a decision by this tribunal (“the Review Decision”), which was issued on 26 October 2012.

6.	In the meantime, on 28 June 2012, the respondent had appealed, to the Court of Appeal, against the Main Decision.

7.	That appeal was based on a substantial number of grounds.  The Court of Appeal rejected all but one of those grounds.

8.	The ground which was successful in the Court of Appeal was a ground relating to jurisdiction. That ground was the first of the grounds which were specified in the notice of appeal:

“(1)	Jurisdiction ... Tribunal had no jurisdiction to uphold unfair dismissal due to the tribunal finding as a primary fact that the defendant was aware of tax avoidance – therefore the tribunal should have dismissed the case due to being unable to enforce an illegal contract”.

9.	The Court of Appeal decided that this tribunal had not provided adequate reasons for our decision on the illegality issue.  Accordingly, the Court allowed the appeal on that ground.  In a ruling which was issued on 8 March 2013, the Court expressed its determinations in the following manner:

			“The Court:

		(1)	Allows the appeal and remits the matter to the Industrial Tribunal with a direction to reconsider the matter in accordance with the judgment of this court, 

	(2)	Reserves judgment reasons, 

	(3)	Reserves the costs of this appeal pending the delivery of the written judgment”.

10.	The judgment of the Court of Appeal was issued in November 2013.  The judgment of the Lord Chief Justice was the judgment of the Court.  At paragraph 9 of that judgment, the Court summarised the factual context in the following terms:

		“[9] In his evidence [the claimant] asserted that he had agreed with Mr Delaney [the respondent’s husband] when he took up his position that he would receive £500 net per week with the restaurant being responsible for his tax and national insurance payments.  The Tribunal considered that evidence untruthful.  It noted that [the claimant] never made any enquiries to check that tax was being deducted from his wages, that he never knew precisely what his gross salary was and never enquired about it and that the tax was not in fact being paid.  The Tribunal concluded that [the claimant] knew or must have known that appropriate tax deductions from his income were not being made and appropriate payments were not being paid over to HMRC”.

11.	At paragraphs 10, 11 and 12 of its judgment, the Court of Appeal discussed the legal principles which are relevant in the context of the illegality issue in this case.

12.	At paragraph 10 of the judgment, Morgan LCJ stated:

		“[10] In Enfield Technical Services v Payne [2008] ICR 30 Elias J conducted a comprehensive review of the cases where the contract was lawful when made but had been illegally performed and the issue was whether the party seeking the assistance of the court had knowingly participated in the illegal performance.  The concept of participation has given rise to some difficulty.  This was addressed in Hall v Woolston Hall Leisure Ltd [2001] ICR 99.  In that case the claimant agreed that she would be paid £250 net per week.  She was provided with payslips which showed that her tax and national insurance payments were calculated on the basis of a gross wage of £250 per week.  She was, therefore, aware of the misrepresentation and raised it with the employer but was told that was the way the employer did business.  The Court held that these circumstances showed acquiescence in the employer’s conduct but reflected the reality that she could not compel her employer to change its conduct”.

13.	At paragraphs 11 and 12 of the judgment, there was discussion about the potential implications, in the present context, of Newland v Simons and Willer (Hairdressers) Ltd [1981] IRLR 359.  At paragraph 12 of his judgment, the Chief Justice expressed the Court’s conclusion in that connection, in the following terms:

		“We consider that the correct legal principles were set out in Hall v Woolston Hall Leisure Ltd, that Newland is inconsistent with those principles and that its reasoning should not be followed”.

14.	At paragraph 13 of the judgment, the ultimate conclusions of the Court were expressed in the following terms:

		“It is apparent from the Tribunal’s decision at paragraph 100 that it clearly understood the legal principles and set them out correctly.  In light of the finding that the respondent knew that appropriate tax deductions from his income were not being made and appropriate payments were not being paid over to HMRC the issue for the Tribunal was whether this was a case of participation or merely a case of acquiescence.  The Tribunal’s conclusion suggests that it was persuaded that this was an acquiescence case but we accepted the submission on behalf of the appellant that the reasoning supporting that conclusion was not sufficiently set out in the decision.  Accordingly, we remitted the case on this single issue to the Tribunal”.

15.	This is our Decision on that remitted issue.

Procedural matters

16.	During the main hearing in the industrial tribunal, in 2012, the respondent was represented by Mr G F Wilson, (although Mr Wilson is not legally qualified, he is an experienced tribunal representative and has represented a significant number of parties in industrial tribunal proceedings).

17.	Mr Wilson ceased to represent the claimant on 27 November 2013.  She was a litigant in person from then onwards until 15 January 2014, when Mr Wilson began again to represent her.  He ceased to represent the respondent from 1 April 2014 onwards.  From that date until 26 November 2014, she was a litigant in person.  Mr Wilson again became the respondent’s representative in these proceedings from 26 November 2014 until 6 January 2015.  With effect from the latter date, he ceased to represent the respondent.  Since that date, she has been a litigant in person in respect of these proceedings.

18.	This case was listed for hearing on 12 June 2015.  The main purpose of that hearing was to carry out the directions which the Court of Appeal had made in remitting this case to this tribunal.  However, prior to embarking on that substantive task, this tribunal had to deal with three anterior issues, which were as follows:

	(1)	In light of the non-attendance of the respondent, we considered whether we should postpone consideration of the respondent’s recusal application, or whether, instead, we should deal with that application in the absence of the respondent.

	(2)	Having decided not to postpone the recusal application, we made a determination in respect of that application.  (We decided not to recuse ourselves).

	(3)	We also had to decide whether or not to postpone the substantive hearing, or to dispose of the subject-matter of that hearing in the absence of the respondent.  (We decided to dispose of the substantive subject-matter in her absence).

19.	The determinations which we made in relation to those anterior issues, and the reasons for those determinations, are set out in a record of proceedings which has been issued to the parties separately.

20.	We all very much regret the fact that it was necessary or appropriate, on several occasions, to postpone the substantive remitted hearing.  We believe that, on each occasion, there was good reason for the relevant postponement.  

Some relevant extracts from the this tribunal’s decisions

21.	We consider that, at this stage, it will be helpful to quote some relevant 
sub-paragraphs and paragraphs of this tribunal’s decisions.  

22.	First, we wish to refer to sub-paragraphs (2) and (3) of paragraph 37 of the Main Decision:

	“(2)  We are satisfied that Mr Lawrence Delaney lied to us when he told us that, although there had been very substantial failures to account to HMRC in respect of income tax, that was not his fault.  (In passing, we note that, in the context of his bankruptcy, Mr Delaney owes HMRC approximately £50,000). ...

	(3)  We regard significant aspects of the evidence of the claimant, on the question of whether he knew, or suspected, that proper payments were not being made to HMRC in respect of his wages, as untruthful testimony.  (See paragraph 97 below).”

23.	Under the heading “Illegality”, the Main Decision dealt with the illegality issue in the following terms:

	“96.  If a contract of employment is illegal (in the sense in which that term is used in the context of contract law), a tribunal is deprived of jurisdiction.  

	97.  In this case, the claimant was always paid in cash.  Throughout his period of employment in the Restaurant, until the termination of his employment, he never obtained a P60.  Payments in respect of tax from his income were never in fact paid over to HMRC.  When he obtained a P60 at the end of his employment, the P60 wrongly indicated that his gross weekly earnings were only £300.  The claimant asserted in his claim form in these proceedings that his earnings were £300.  The respondent in the Response asserted that the claimant’s gross weekly earnings were £300.  Yet, as was subsequently accepted by both parties (in the course of oral testimony during the main hearing), [the claimant] actually received wages of £500 per week.  In our view, the claimant knew, or must have known, that appropriate tax deductions from his income were not being made, and that appropriate payments were not being paid over to HMRC.

	98.  Against that background, it has been necessary for the tribunal to consider the illegality question.  

	99.  There are three categories of case in which a contract may be tainted with illegality.  The first category is where the contract was entered into with the intention of committing an illegal act.  (There is no indication that that first category of illegality is relevant in the circumstances of this case).  The second category is where the contract is prohibited by statute.  (Again, it is clear that the relevant contract in this case does not fall within that category).  The third category relates to contracts which were lawful when made but which have been illegally performed.  In light of the factual context of this case, it is clear that it is only the third category which is relevant in this case.  (There was nothing to stop the parties lawfully operating the claimant’s contract of employment.  In order to do so, all that was necessary was for the employer to make the appropriate deductions for income tax, and to pay those deductions over to HMRC).

	100.  We consider that it is now clear law that, in order for a particular situation to fall within this third category of illegality, there are two requirements.  The claimant must have knowledge of the illegal performance and the claimant must also actively participate in that illegal performance.  A claimant will not have “participated” (in the sense in which that term is used in the present context) unless he knowingly entered into arrangements which, to his knowledge, represented the facts of the employment relationship to be other than they really were.  In our view, on the evidence made available to us in this case, there is insufficient proof that the claimant did enter into arrangements which to his knowledge represented the facts of the employment relationship, whether to HMRC or to anyone else, to be other than they really were.  

	101.  For that reason, we have decided that we are not deprived of jurisdiction, on account of illegality.”  

24.	It seems to us that paragraphs 50 and 51 of the Main Decision are also relevant to the present context:

	“50.  It was agreed by the parties that the claimant received wages of £500 every week.  We have calculated the basic award (and also the compensatory award) on the basis of gross wages of £500 per week.  

	51.  During the course of his oral testimony, the claimant asserted that the £500 was net wages per week.  He said that it had been agreed between himself and Mr Lawrence Delaney, at the time when he agreed to take up employment in the Restaurant, that he would be entitled to £500 net per week.  He also said that, during that conversation, it had been agreed that the Restaurant would be responsible for paying his tax and employees national insurance contributions.  We regard that part of his testimony as untruthful testimony.  

	52.  In arriving at the latter conclusion, we took account of the following.  First, the claimant asserted that he never knew precisely what his gross salary was, and never enquired about it.  Secondly, in reality the appropriate tax was not in fact being paid to HMRC on the claimant’s behalf.  Thirdly, the claimant told us that he never made enquiries to check that tax was being deducted from his wages, even though he knew that he was always being paid in cash”.

25.	The reference at paragraph 52 to deductions being paid to HMRC “on the claimant’s behalf” is, of course, a drafting error.  At all material times, we have always been fully aware of the fact that, in respect of an employee, the responsibility for making proper deductions, and for paying over PAYE, rests solely with the employer, (as distinct from being a responsibility of the employee).  

26.	At paragraphs 55 and 56 of the Main Decision, we stated the following:

	“55.  During the course of his oral argument, on 25 April, Mr Wilson argued that the implication of the Nerva case was that we should treat the claimant’s salary as being substantially less than £500 per week (apparently upon the argument that Nerva shows that tips should be ignored for the purpose of calculating the overall amount of a claimant’s remuneration).  We reject that argument.  It is clear that, when the claimant agreed to take the job at the Restaurant, this was on the basis that he was going to be paid £500 per week by the employer.  Whether or not any part of that £500 was to be funded through tips is irrelevant in the context of determining the overall amount of the remuneration which was due to the claimant from the respondent.  

	56.  We have calculated the claimant’s loss on the basis of weekly wages of £385 and £389.  Those are the net weekly amounts which he would have received each week if the proper deductions (deductions in respect of income tax and in respect of national insurance contributions) had been made.  The assumed deductions in respect of tax and national insurance have been calculated on the basis of the amounts which were due by law, in respect of income tax and national insurance, during the relevant tax years, from employees who had gross earnings of £500 per week”.  

27.	As already noted above, the respondent applied to the tribunal for a review of the Main Decision.  One of those grounds for review was set out at page 2 of the review application, in the following terms:

	“(a)  Having found as a primary fact that the claimant knew that tax avoidance was occurring surely the tribunal erred in not dismissing the case for lack of jurisdiction because of the unenforceability of an illegal contract”? 
	
	The review hearing took place in July 2012 and the illegality review ground (as quoted above) was dealt with at paragraph 13 of the Review Decision, in the following terms:

	“Ground 7 is that the tribunal should have dismissed the case because we concluded that the claimant was aware that income tax evasion, in relation to his salary, was occurring.  In the circumstances of this case, which [sic] for reasons which were explained at paragraph 100 of the [Main] Decision, mere knowledge of tax evasion was an insufficient basis for depriving the tribunal of jurisdiction to entertain the unfair dismissal claim.  During the course of the review hearing, Mr Wilson asserted that the tribunal had been wrong not to cite any authority for the legal propositions which are set out at paragraph 100 of the [Main Decision].  In our view, there is no need for a tribunal to cite a case in support of every legal proposition which is mentioned in a Decision.  The propositions mentioned at paragraph 100 of the [Main] Decision are now very well known in the field of employment law.  (They were recently explored by Elias P in Emfield Technical Services v Payne [2008] ICR 30).”

The scope of our task

28.	What is the scope of this tribunal’s duties and powers, in implementing the remittal directions of the Court of Appeal?  I dealt with that matter at paragraph 4 of the record of proceedings of a Case Management Discussion (“CMD”) which took place on 15 January 2014:

	“4.  As I pointed out to the parties during this CMD, there are three possible options arising from the Court of Appeal’s remittal of the illegality issue to ourselves:

(1)	The tribunal will provide reasons for the decision on illegality which it has already made.  

(2)	The tribunal will consider the illegality issue afresh, on the basis of the evidence which it has already received in this case.  

(3)	The tribunal will consider the illegality issue afresh, on the basis of the evidence which it has already received, but also on the basis of any oral or documentary evidence which it receives during the course of the [substantive remitted] hearing.”

29.	During the course of the January 2014 CMD, Mr McKee’s position was that option (1) was the correct option.  On the other hand, Mr Wilson tended towards the view that option (3) was the correct option.

30.	Subsequently, with my encouragement, the claimant’s representatives sought guidance from the Court of Appeal as to the correct option.  (I explained my reasons for that “encouragement” at paragraphs 9-17 of the record of proceedings of a CMD which took place on 2 April 2014).  

31.	The Court of Appeal did provide the guidance which was requested.  That guidance was contained in a letter dated 28 August 2014 from Mr Ian McWilliams of the Central Office of the Royal Courts of Justice.  In the course of that letter, Mr McWilliams stated:

	“The Court of Appeal has directed that the Industrial Tribunal should adopt whatever course appears to it to be desirable after hearing the views of the parties.  If either party wished to adduce further material, that party may have to explain why the material was not advanced originally in order to obtain leave”.

32.	It seems to us that the implication of the guidance set out in that letter is that,  subject to the “leave” requirement, option (3) is the appropriate option.

33.	A copy of the McWilliams letter was provided to the respondent.  In this case, we have not received any application, on behalf of either party, to provide any new oral or documentary evidence.  Accordingly, option (3) became irrelevant in the circumstances of this case.  However, we have dealt with the remitted issue as though option (2) applies.

34.	We note that option (2) involves the tribunal in considering the illegality issue afresh, on the basis of the evidence which it has already received in this case.  

The legal principles

35.	The substantive and procedural legal principles which are relevant in the present context were considered at some length by an industrial tribunal in Hall v Printyard Ltd and Department for Employment and Learning [2014] NIIT 133/13 
(30 June 2014).  (I was the chairman of that tribunal).  At this point, it will be helpful to quote paragraphs 24-33 of the Decision in that case:

“24.	In situations in which an employee knows that his employer is not deducting the proper amount of tax from his wages, the employee is nevertheless entitled to pursue claims against the employer, in respect of notice pay or redundancy pay, unless the relevant contract of employment is vitiated by reason of illegality.

25.	In the context of employment law, there are three types of contractual illegality.  In the specific context of PAYE under-deductions, only one type of illegality, illegality as to performance, is relevant.

26.	It is now clear law that illegality by way of performance will not prevent an employee from recovering money pursuant to the relevant contract of employment, even if he contemporaneously knew of the under-deductions of PAYE income tax, unless he participated in that illegality.

27.	In situations like the situation in this case, an employee “participates”, in the context of PAYE under-deductions, only if one of two situations exists:

(1)	The employee is a party to some misrepresentation, of the true facts, to some third party.

	(2)	The employee is the instigator, or a co-instigator, of the under-deduction arrangements.

	(See Pickard v Hughes, UKEAT/0185/10/LA, 28 January 2011, especially at paragraph 13 of the judgment).

28.	Where does the onus of proof lie?  It lies with the party who asserts that the contract of employment has been vitiated as the result of illegality by way of performance: (See Colen v Cebrian (UK) Ltd [2003] EWCA Civ 1676, at paragraph 19 of the judgment).

29.	Volume I of “Chitty on Contracts”, Thirty-First Edition, at paragraphs 16-207 and 16-208, discusses “Pleading and Practice” in the context of contractual illegality issues.

30.	According to paragraphs 16-207, the position is as follows.  The party alleging the illegality of the contract bears the legal burden of proving that contention.  If the contract is reasonably susceptible of two modes of performance, one lawful and the other not lawful, the legal burden of proving the illegality of performance will be undischarged.

31.	The main relevant points in paragraph [16-208] can be summarised as follows:

	(1)	If the contract is not illegal on the face of it, evidence of extraneous circumstances tending to show illegality should not be admitted unless the circumstances relied upon are pleaded.

	(2)	If unpleaded acts which, taken by themselves, show an illegal object, have been put in evidence (because, perhaps, no objection was raised, or because they were adduced for some other purpose), the court should not act on them unless it is satisfied that the whole of the relevant circumstances are before it.

	(3)	However:

(a)	if the court is satisfied that all the relevant facts are before it, and 

(b) 	if the court can clearly see from them that the contract had an illegal object

the court may not enforce the contract, whether the relevant facts were pleaded or not.

32.	The commentary in paragraphs 16-207 and 16-208 of Chitty mainly relates to the mainstream courts.  We note that proceedings in the mainstream courts are almost entirely adversarial and that, although the procedures of industrial tribunals are also mainly adversarial, there is an inquisitorial element.  (For example, see paragraph (3) of Rule 14 of the Industrial Tribunals Rules).  We note also that industrial tribunals take a more relaxed attitude to pleadings than (for example) the High Court does.  However, it seems to us that the general thrust of 
paragraphs 16-207 and 16-208 provide a broadly accurate description of the situation in industrial tribunals, regarding evidential issues, in the context of allegedly illegally performed contracts. 

33.	The implications, in the present context, of the points made in the relevant paragraphs of Chitty can be summarised as follows:

	(1)	A tribunal has to consider the illegality issue, if there is evidence in respect of participation in illegal performance, even if no party to the litigation has raised the illegality issue.

	(2)	If there is evidence pointing towards “participation”, on the part of a claimant (in the illegal performance of a contract), but the alleged illegality has not been raised in the response, a tribunal should not act upon that evidence, unless the tribunal is satisfied that the whole of the relevant circumstances are before it.

(3)	If a tribunal is not sure that the claimant has “participated” in the illegal performance of a contract, the tribunal should not decline to enforce the contract.”

	In the circumstances of this case, we endorse and apply the legal principles which are set out in those at paragraphs of Hall v Printyard.

36.	In Pickard, an employment judge had dismissed a claim under the National Minimum Wage Regulations on the basis that the employee had “colluded” in her employer’s failure to PAYE.  The claimant appealed against that decision.  The appeal was allowed, on the basis that the judge had provided no adequate reasons for the “collusion” conclusion.  Paragraph 13 of the judgment in Pickard is worth quoting in full, because, at that paragraph, Underhill P provides a summary of the situations in which an employee can lose the right to invoke employment protection legislation, on account of participation in the illegal performance of the relevant contract of employment:

	“However, even if I were wrong about that, there is a further difficulty when we come to what I have described as element (b). Even if the [respondent employer’s] performance of the contract was illegal, the question remains whether the [appellant employee] participated in that illegality. The Judge's findings on this aspect are clearly unsatisfactory. The authorities establish that mere passive acquiescence in a misrepresentation – or, I would add, and perhaps a fortiori, concealment - by his or her employer is not enough: there needs to be an element of positive participation. But the Reasons contain no examination of the [appellant employee’s] knowledge or state of mind about the arrangement under which she was paid cash-in-hand. Did she, for example, positively seek such an arrangement herself or was it simply presented to her by the [employee] as a fait accompli ? It is true that the finding of "collusion", in paragraph 9 of the Reasons, ought to imply a finding by the Judge that the [employee] had indeed actively associated herself in the [employer’s] conduct; but there is no indication of what that active participation consisted of and, importantly, such a finding would be inconsistent with the Judge's express acknowledgement, at paragraph 8 (b) of the Reasons, that the [employee’s] state of mind might simply have been that she was "not bothered" whether the [employer] was paying tax or not. That may - I do not have the material to know - have been a generous finding, but once it is acknowledged as a possibility it seems to me wholly inconsistent with a finding of participation”.

37.	At paragraph 100 of the Main Decision, in considering the test for participation, in the context of illegal performance, in the relevant situations (in situations in which there have been under-deductions of a tribunal applicant’s wages), we focused on the question of whether a claimant had knowingly entered into arrangements which, to his knowledge represented the facts of the employment relationship to be other than they really were.  However, in light of the commentary at paragraph 13 of Pickard, which had not come to our attention at the time we issued the Main Decision, it seems to us that the position is as follows.  In the relevant circumstances (in a situation in which there has been an under-deduction of income tax from a particular employee’s wages, and/or a failure to pay over relevant amounts to HMRC), the employee can “participate” in the relevant employer’s illegal performance: 

(1)	not only by being a party to a misrepresentation of the facts, but also 

(2)	by being a co-instigator, or the main instigator, of the relevant arrangement.

38.	As Underhill P made clear at paragraph 8 of Pickard, in the relevant context (in the context of illegal performance which takes the form of the non-payment of tax, to HMRC, on a claimant’s earnings) the relevant breach of obligation is that of the employer, because it is the employer’s obligation to pay the tax of her employees under PAYE.  A failure, in bad faith, by an employer to pay tax under PAYE on an employee’s earnings constitutes unlawful performance of the relevant contract of employment on the employer’s part.  In relevant situations, the employee participates in that illegal performance (by the employer), either by being an instigator of that illegal performance, or, while the contract of employment is ongoing, by helping to conceal or misrepresent in a relevant way.  In our view, the whole concept of participation (on the part of an employee) in the employer’s illegal performance of the relevant contract of employment, necessarily implies that the participation is occurring during the subsistence of the contract.  In our view, under the Hall v Woolston Hall Leisure Ltd principles, the participation has to be contemporaneous with the relevant (illegal) performance.  An ex-employee does not retrospectively “participate” in the past illegal performance of a contract of employment which is now terminated, even if he now engages in untruths or deception, on questions relating to what had happened when the contract was still subsisting.

The evidence and our conclusions

39.	Throughout these proceedings, the respondent’s position has been that if the tribunal found (as it has found) that there was a deliberate failure to make deductions, which the claimant knew about at the time of the under-deduction, those findings, in themselves, should have been sufficient to deprive this claimant of the protection of the relevant employment legislation.

40.	Neither the respondent, nor any witness on behalf of the respondent, ever admitted that there was any deliberate intention, by or on behalf of the respondent, to fail to make income tax payments to HMRC.  

41.	Accordingly, this is not a case in which a respondent is arguing that she performed the contract illegally (by deliberately failing to deduct, or to account to HMRC, for income tax).

42.	The claimant told us that he was told by Mr Delaney that he would be paid £500 per week net and that the respondent would be responsible for payment of any national insurance deductions or income tax which would be due on his wages.  We have found as a fact that this was untruthful evidence.

43.	It will also be recalled that, in these proceedings, the claimant incorrectly asserted in his claim form that his earnings were only £300 per week.  

44.	Why did the claimant become involved in the untruths mentioned at paragraphs 42 and 43 above?  He may have done so because he was the main instigator, or one of the instigators, of the relevant arrangements (of under- deductions and of failures to make payments in respect of the amounts which should have been deducted).  However, he may have done so only because he was embarrassed about the situation.  Or he may have done so because he was frightened that he would become liable to recovery procedures on the part of the HMRC if he told the truth about the situation.  Or he may simply have thought that it was enough, for the purpose of depriving him of the protection of the relevant employment legislation, for him to be found to have known contemporaneously, about the relevant arrangements.

45.	Which of those possibilities is the true position?  We don’t know.  In our view, the behaviour referred to at paragraphs 42 and 43 above is an insufficient evidential basis for any conclusion that the claimant was the instigator, or a co-instigator, of the relevant arrangements.

46.	During the course of this remitted hearing, we carefully reconsidered all the evidence available to us in respect of the relevant issues.  We cannot think of any evidence, other than the matters mentioned at paragraphs 42 and 43 above, which tends to show that the claimant was an instigator, or a co-instigator, of the relevant arrangements.  We note that, throughout the entire period since the date on which the Main Decision was issued, neither the respondent nor Mr Wilson (at any of the times when he was the respondent’s representative) has ever identified any such other evidence.

47.	We are sure that we have received no evidence at all, either oral or documentary, which tends to show that, at any time prior to the termination of the contract of employment, the claimant was a party to any relevant misrepresentation or concealment.

48.	In summary, the position is as follows. 

(1)	The only evidence that the claimant was an instigator, or was a co-instigator (of the relevant tax evasion arrangements) was as follows:  After the contract had ended, he initially sought to mislead us as to the true nature of the arrangements between himself and Mr Delaney (See paragraphs 42 and 43 above).  In our view, that evidence is clearly an insufficient basis for any conclusion, on the balance of probabilities, that the claimant was an instigator, or a co-instigator, of the under-deduction arrangements.

	(2)	We received no evidence whatsoever that the claimant, while still an employee, was a party to any relevant misrepresentation or concealment.

Consequences

49.	The implication of the foregoing is that our original award, as set out in the Main Decision, is still valid and effective.  That award was quoted at paragraph 3 above.

Employment Judge

Date and place of hearing:   12 June 2015, Belfast.

Date decision recorded in register and issued to parties: