The claimant was living illegally in England, having falsified her affidavit at the instigation of the first respondent. The claimant was subjected to harsh treatment by the first respondent and was dismissed. She brought claims of unfair dismissal, breach of contract, unpaid wages and holiday pay, race discrimination and loss of earnings. The ET dismissed most of the claims, saying that on the issue of unfair dismissal, the contract of employment was tainted with illegality and she therefore could not bring the claims before the ET. The claimant's claim of race discrimination succeeded, the Tribunal saying that the respondents would not have dismissed a hypothetical white British comparator so therefore the claimant's dismissal was an act of unlawful race discrimination. The claimant's non-dismissal race discrimination claims failed because she had not complied with the statutory grievance procedures. The ET also ruled that the claimant was not entitled to an award for loss of earnings as she was not allowed to work in this country. The EAT upheld their decisions, though they were critical of the ET's judgment.

In this judgment, Rimer LJ first considers the claimant's arguments on the failure to raise a grievance, concluding that both the ET and EAT had not properly considered s.11(3)(c) of the Employment Act 2002 (Dispute Resolution) Regulations and so allows the appeal. However he then goes on to consider the submission that, as the non-dismissal claims were debarred on public policy grounds because of illegality, the other claims should likewise be debarred as the dismissal discrimination claim was inextricably bound up with the illegal nature of her employment. He reviews the cases of Hall and Vakante noting that Hall "shows that the fact that the employee may be barred by illegality from enforcing her contract of employment will not automatically lead also to the conclusion that she will be barred from claiming compensation for a discriminatory dismissal from her employment," but finds that this case is closer to Vakante at [61] stating

'To the question whether her discrimination claim arose out of, or was clearly connected or inextricably bound up or linked with her own illegal conduct, the answer is, I consider, obviously 'yes'. In my judgment her claim to recover compensation for dismissal discrimination is plainly barred by the principles explained in Hall's case and applied in Vakante's case. If this court were to allow her to make that case, and so rely upon her own illegal actions, it would be condoning her illegality. That is something the court will not do.'

_____________

Neutral Citation Number: [2012] EWCA Civ 609

Case No: A2/2011/1100

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Mr Justice Silber, Mr K. Edmondson JP and Mrs M.V. McArthur BA FCIPD

UKEAT/0326 to 03229/10/LA

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 15/05/2012

Before :

LORD JUSTICE LONGMORE

**LORD JUSTICE RIMER

**and

SIR SCOTT BAKER

• - - - - - - - - - - - - - - - - - - - -

Between :

HOUNGA (Appellant)

- and -

(1) ALLEN (née ABOYADE-COLE); (2) KALLEN (Respondents)

• - - - - - - - - - - - - - - - - - - - -

David Reade QC (instructed by the North Kensington Law Centre) for the Appellant

Laura Prince (instructed by Crowther Solicitors) for the First Respondent, Adenike Allen

The Second Respondent, Kunle Allen, was not represented

Hearing date: 13 February 2012

• - - - - - - - - - - - - - - - - - - - -

Judgment

Lord Justice Rimer :

Introduction

1. An appeal and cross-appeal in employment proceedings are before us. The claimant/appellant is Ms Hounga. The first respondent, and cross-appellant, is Ms Allen. Her husband, Mr Allen, is also named as a respondent but took no part in the appeal and was not represented. Ms Hounga was represented by David Reade QC. Mrs Allen was represented by Laura Prince.

1. Ms Hounga was employed by the Allens from 28 January 2007 until her dismissal on 17 July 2008. Her duties were in the nature of those of an au pair, the Allens having three young children. Ms Hounga is a Nigerian national and Mrs Allen has dual Nigerian and British nationality. Following her dismissal, Ms Hounga wished to bring tribunal claims against the Allens for a variety of claims including for unfair dismissal, breach of contract, unlawful deductions from her wages and holiday pay; and, more relevantly for present purposes, for compensation for dismissal on racially discriminatory grounds ('dismissal discrimination') and for racially discriminatory treatment during the currency of her employment ('non-dismissal discrimination'). The time for bringing her claims began to run against her on 17 July 2008. She faced a practical problem in doing so, however, as although she had lived with the Allens for 18 months, she did not know where that was for the purpose of serving a claim upon them or otherwise contacting them.

1. Despite that difficulty, the North London Kensington Law Centre presented an ET1 on her behalf to the London Central Employment Tribunal on 22 December 2008. The tribunal, however, rejected it of its own motion on the grounds that (i) Ms Hounga had not raised a grievance with the Allens, which under the law then in force was a condition of the bringing of certain of her claims, in particular the non-dismissal discrimination claim; and (ii) no address for service on the Allens was provided. The Law Centre then made further enquiries as to the Allens' address, which it ascertained by about 11 March 2009. Ms Hounga's ET1 was re-submitted on 18 March 2009, following which the Allens were served and the claims were proceeded with.

1. The claims were heard by the London Central Employment Tribunal over three days in July 2009 before Employment Judge Warren, Ms C. McLellan and Ms H. Lapierre. Ms Hounga was represented by Michael Reed from the Free Representation Unit. The Allens were represented by their solicitor. By its judgment, sent with written reasons to the parties on 6 August 2009, the tribunal decided as follows. First, it held that Ms Hounga's contract of employment with the Allens was tainted with illegality as Ms Hounga was, as she knew, not allowed to work in this jurisdiction. In consequence, the tribunal dismissed on public policy grounds her claims for unfair dismissal, breach of contract, unpaid wages and holiday pay. That decision is not in question before us. Second, the tribunal nevertheless held that Ms Hounga was in employment with the Allens for the purposes of the Race Relations Act 1976 and that her dismissal was an act of unlawful race discrimination (the dismissal discrimination) for which she was entitled to compensation. Third, the tribunal held that as her non-dismissal discrimination claim had not been preceded by the raising of a grievance, the tribunal had no jurisdiction to hear it and that claim was also dismissed. The tribunal's second and third decisions are both in question before us.

1. The tribunal's dismissal of the non-dismissal discrimination claim was the subject of an application to the tribunal by Ms Hounga (again represented by Mr Reed) for a review. That application was heard on 22 February 2010. The tribunal rejected it for reasons sent to the parties on 16 April 2010. In the meantime, on 9 April 2010 the matter had returned to the tribunal for a remedy hearing on Ms Hounga's successful claim for dismissal discrimination. For reasons also sent to the parties on 16 April 2010, the tribunal assessed her damages, including interest, at £6,186.90. That was by way of recompense for injury to feelings: it included no compensation for any lost work opportunity since Ms Hounga had no right to work here.

1. Ms Hounga and Mrs Allen appealed to the Employment Appeal Tribunal ('the EAT') against the tribunal's holdings that were respectively adverse to them. The outcome, so far as now relevant and as explained in the EAT's reserved judgment delivered on 31 March 2011 (Silber J, Mr K. Edmondson JP and Mrs M.V. McArthur BA FCIPD), was that the EAT upheld (i) the tribunal's dismissal of Ms Hounga's non-dismissal discrimination claim; and (ii) the tribunal's decision on her dismissal discrimination claim. Ms Hounga's appeal to us is against the EAT's holding (i). Mrs Allen's cross-appeal is against its holding (ii). Ms Hounga's appeal was the first matter argued before us and so I shall deal with it first. I preface my discussion of it with the observation that it was Ms Prince's submission that, were we to uphold Mrs Allen's cross-appeal, any formal success by Ms Hounga on her appeal would in practice take her nowhere. That is because, even if both tribunals below were in error in the manner in which they disposed of the grievance issue, success on the cross-appeal must inevitably mean that Ms Hounga can have no prospect of success on the substance of her non-dismissal discrimination claim. It would follow, said Ms Prince, that all Ms Hounga's proceedings ought to be brought to a final full stop by this court.

Ms Hounga's appeal

A. The legislative provisions and the decisions of the tribunals below

1. This appeal turns on the, now repealed, dispute resolution provisions in section 32 of, and Schedule 2 to the Employment Act 2002 and in the regulations made under section 32. The purpose of such provisions was to encourage the resolution of disputes outside the tribunal process. Section 32(1) provides that '[t]his section applies to the jurisdictions listed in Schedule 4', and Ms Hounga's non-dismissal discrimination claim was of a nature so listed, the relevant procedures applying to most employment tribunal claims not related to a dismissal or a disciplinary action. Section 32 then provides, so far as material:

'(2) An employee shall not present a complaint to an employment tribunal under a jurisdiction to which this section applies if –

(a) it concerns a matter in relation to which the requirement in paragraph 6 or 9 of Schedule 2 applies, and

(b) the requirement has not been complied with.

(3) An employee shall not present a complaint to an employment tribunal under a jurisdiction to which this section applies if –

(a) it concerns a matter in relation to which the requirement in paragraph 6 or 9 of Schedule 2 has been complied with, and

(b) less than 28 days have passed since the day on which the requirement was complied with….'

1. The material parts of Part 2 of Schedule 2, headed 'Grievance Procedures', are as follows:

'Chapter 1

STANDARD PROCEDURE

1. The employee must set out the grievance in writing and send the statement or a copy of it to the employer.

1. (1) The employer must invite the employee to attend a meeting to discuss the grievance.

(2) The meeting must not take place unless –

(a) the employee has informed the employer what the basis for the grievance was when he made the statement under paragraph 6, and

(b) the employer has had a reasonable opportunity to consider his response to that information.

(3) The employee must take all reasonable steps to attend the meeting.

(4) After the meeting, the employer must inform the employee of his decision as to his response to the grievance and notify him of the right to appeal against his decision if he is not satisfied with it.

1. (1) If the employee does wish to appeal, he must inform the employer.

(2) If the employee informs the employer of his wish to appeal, the employer must invite him to attend a further meeting.

(3) The employee must take all reasonable steps to attend the meeting.

(4) After the appeal meeting, the employer must inform the employee of his final decision.

Chapter 2

MODIFIED PROCEDURE

1. The employee must –

(a) set out in writing –

(i) the grievance, and

(ii) the basis for it, and

(b) send the statement or a copy of it to the employer.

1. The employer must set out his response in writing and send the statement or a copy of it to the employee.

Part 3

GENERAL REQUIREMENTS

Introductory

1. The following requirements apply to each of the procedures set out above (so far as applicable).

Timetable

1. Each step and action under the procedure must be taken without unreasonable delay….'

1. Schedule 2 does not explain when or how the modified rather than the standard procedure may be used. Section 32(7) of the 2002 Act, however, empowered the Secretary of State to make regulations about (inter alia) the application of those procedures. The regulations so made are The Employment Act 2002 (Dispute Resolution) Regulations 2004 (S1 2004/752). Regulations 6 and 11 provide:

'Application of the grievance procedures

6.- (1) The grievance procedures apply, in accordance with the [sic] paragraphs (2) to (7) of this regulation, in relation to any grievance about action by the employer that could form the basis of a complaint by an employee to an employment tribunal under a jurisdiction listed in Schedule 3 or 4, or could do so if the action took place.

(2) Subject to paragraphs (3) to (7), the standard grievance procedure applies in relation to any such grievance.

(3) Subject to paragraphs (4) to (7), the modified grievance procedure applies in relation to a grievance where –

(a) the employee has ceased be employed by the employer;

(b) the employer –

(i) was unaware of the grievance before the employment ceased, or

(ii) was so aware but the standard grievance procedure was not commenced or was not completed before the last day of the employee's employment; and

(c) the parties have agreed in writing in relation to the grievance, whether before, on or after that day, but after the employer became aware of the grievance, that the modified procedure should apply.

(4) Neither of the grievance procedures applies where –

(a) the employee has ceased to be employed by the employer;

(b) neither procedure has been commenced; and

(c) since the employer ceased to be employed it has ceased to be reasonably practicable for him to comply with paragraph 6 or 9 of Schedule 2.

(5) Neither of the grievance procedures applies where the grievance is that the employer has dismissed or is contemplating dismissing the employee.

(6) Neither of the grievance procedures applies where the grievance is that the employer has taken or is contemplating taking relevant disciplinary action against the employee unless one of the reasons for the grievance is a reason mentioned in regulation 7(1).

(7) Neither of the grievance procedures applies where regulation 11(1) applies. …

General circumstances in which the statutory procedures do not apply or are treated as being complied with

11.– (1) Where the circumstances specified in paragraph (3) apply and in consequence the employer or employee does not commence the procedure that would otherwise be the applicable statutory procedure (by complying with paragraph 1, 4, 6 or 9 of Schedule 2), the procedure does not apply.

(2) Where the applicable statutory procedure has been commenced, but the circumstances specified in paragraph (3) apply and in consequence a party does not comply with a subsequent requirement of the procedure, the parties shall be treated as having complied with the procedure.

(3) The circumstances referred to in paragraph (1) and (2) are that –

(a) the party has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in a significant threat to himself, his property, any other person or the property of any other person;

(b) the party has been subjected to harassment and has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in his being subjected to further harassment; or

(c) it is not practicable for the party to commence the procedure or comply with the subsequent requirement within a reasonable period.

(4) In paragraph (3)(b), "harassment" means conduct which has the purpose or effect of –

(a) violating the person's dignity, or

(b) creating an intimidating, hostile, degrading, humiliating or offensive environment for him,

but conduct shall only be regarded as having that purpose or effect if, having regard to all the circumstances, including in particular the perception of the person who was the subject of the conduct, it should reasonably be considered as having that purpose or effect.'

1. Regulation 6(2) shows that the default position is that the standard grievance procedure applies. Regulation 6(3) explains the circumstances in which the modified procedure will apply (in particular, it requires the parties' written agreement). Regulations 6(4) to (7) explain particular circumstances in which neither procedure applies. Regulation 11 casts its net wider than regulation 6 in that it is concerned not just with circumstances in which the grievance procedures either do not apply or are treated as complied with, it is concerned also with the application of the dismissal and disciplinary procedures in Schedule 2. For the purposes of this appeal, the provisions of particular materiality are regulation 6(4) and regulations 11(1) and (3)(b) and (c), which provide for different circumstances in which the grievance procedures do not apply at all.

1. Ms Hounga did not precede the bringing of her non-dismissal discrimination claim by the initiation of either the grievance procedures prescribed by paragraphs 6 and 9 of Schedule 2. The issue is whether, despite that omission, the tribunal nevertheless had jurisdiction to hear her claim and ought to have entertained it. That turns on whether the grievance procedures were, in the circumstances of her case, disapplied by regulations 11(1) and (3). How was that issue dealt with in the tribunals below?

1. Either at or prior to the hearing of Ms Hounga's claims in July 2009, the parties' representatives agreed a list of issues. That list did not include any issue as to whether Ms Hounga's non-dismissal discrimination claim was barred by her failure to precede it by raising a grievance. Nor was such issue the subject of argument at the hearing, at which the claim was simply advanced and defended on its merits. Nevertheless, whatever the parties' views on the point may have been, there was in fact a real issue as to the tribunal's jurisdiction and, when the tribunal produced its reasons for its judgment on Ms Hounga's claims, it (a) listed that issue as one for its decision, and (b) then, in paragraph 41, dismissed the non-dismissal discrimination claim on the ground that the omission to raise any grievance in respect of the acts complained of deprived the tribunal of jurisdiction to hear it.

1. The tribunal's decision on that issue was the subject of Ms Hounga's application for a review. Mr Reed again represented Ms Hounga and Mrs Allen appeared in person. There was a difference before us as to whether Ms Hounga attended that hearing: Mr Reade's instructions were that she did not, she having been too frightened to attend. Ms Prince's instructions were that she did. We cannot, and anyway do not need to, resolve that conflict. More important is that, whether or not she was present, she did not give any oral evidence at that hearing. Nor was any witness statement from her tendered to the tribunal.

1. It is apparent from the tribunal's reasons refusing a review that, at the hearing, Mr Reed referred the tribunal to, and relied on, both regulations 6 and 11 of the 2004 Regulations. His first point, under regulation 6(4)(c), was that the grievance procedures did not apply because following the termination of Ms Hounga's employment with the Allens it had 'ceased to be reasonably practicable for [her] to comply with paragraph 6 or 9 of Schedule 2'. The tribunal rejected that, saying that whilst it had not been so practicable to do so down to 11 March 2009 (before which Ms Hounga did not know the Allens' address), there was no reason why she could not do so thereafter, and prior to the re-submission of her ET1 to the tribunal. In the light of Ms Prince's submissions on this appeal, I should set out the tribunal's reasoning in relation to Mr Reed's regulation 6(4)(c) argument:

'10. Dealing first with regulation 6.

1. Mr Reed relies on the fact that it was not reasonably practicable to have presented a complaint.

1. Initially it was not reasonably practicable because [Ms Hounga] did not know the address of the Respondent but that was the case up to 11 March 2009 but as of 11 March 2009 [Ms Hounga] and her advisers knew the Respondents address. In our opinion what should have happened was that [Ms Hounga] could have sought leave of the Tribunal to raise the grievance out of time and pleaded in aid the facts that have been stated in this application namely that [she] was unaware of the Respondents address and that was the reason for submission of a late grievance.

1. So we do not accept that it was not reasonably practicable to have presented a grievance prior to submission of the ET1, on 18 March 2009 as the address was known and [Ms Hounga] was advised by a Law Centre which was well versed in employment law.'

1. There was no prescribed time limit for presenting a grievance, and so to what in that respect the tribunal was referring in paragraph 12 is obscure. Mr Reade suggested, and Ms Prince agreed, that the tribunal probably had in mind the fact that the non-dismissal discrimination claim, when eventually presented to the tribunal, would have been out of time so that the tribunal would have been required to consider whether it should extend the time for bringing it on 'just and equitable' grounds (as it did for the dismissal discrimination claim). If so, paragraph 12 reflected a confused expression of thought by the tribunal but the general thrust of its point was nevertheless sufficiently clear: namely, that although it had not been reasonably practicable for Ms Hounga to present the grievance down to 11 March 2009, it was so practicable thereafter. It had not, therefore, 'ceased' to be so practicable for the purposes of regulation 6(4)(c).

1. The tribunal turned to regulation 11. Its reasons recorded only that reliance was placed on the combined effect of regulations 11(1) and (3)(b). The tribunal rejected that case too, saying:

'15. As of 11 March 2009 [Ms Hounga] was no longer in the workplace situation she was assisted by and protected by a social worker, assisted by a very able representative from the North Kensington Law Centre. The grievance could have been conducted under the modified procedure so there were no grounds for [Ms Hounga] to believe that commencing the procedure or complying with the subsequent requirements would result in her being subjected to further harassment and in fact continuing the grievance in the modified form was no different than presenting a claim to the Employment Tribunal. So for all those reasons this application for review fails and we confirm our original decision that the Tribunal does not have jurisdiction to consider the non dismissal acts of age [sic: should be race] discrimination.'

The tribunal made no reference to any argument also placed on the combined effect of regulations 11(1) and (3)(c).

1. At the EAT (at which Mr Reed again represented Ms Hounga and Ms Prince represented Mrs Allen – Mr Allen had been debarred from participating in the appeal), the jurisdiction issue (one of five) was dealt with between paragraphs 51 and 60 of the 71-paragraph judgment delivered by Silber J.

1. Dealing first with the regulation 6(4) argument, the EAT also rejected it. According to paragraph 53, the argument was that if, following the cessation of Mr Hounga's employment, a period elapsed in respect of which it could be said that 'it has ceased to be reasonably practicable for [her] to comply with paragraph 6 or 9 of Schedule 2', it was not possible for circumstances later to change so that compliance with the grievance procedure could then take place. The EAT said:

'54. We are unable to accept the submission which would have the surprising consequence that if it had not been reasonably practicable to make the grievance for say the first two days of the period because of ill-health of a party, then it would follow that that would absolve the party thereafter from complying with the obligation. No authority or cogent reason has been put forward to suggest that that is the case and indeed Miss Prince has shown that there is highly persuasive authority to the contrary.

1. Thus in Schultz v. Esso Petroleum Ltd [1999] ICR 1202, the issue was the circumstances in which the period for presenting a claim in an unfair dismissal case would be extended "if it was not reasonably practicable for the complaint to be presented before the end of that period of three months" (s.111(2) ERA 1996). The Court of Appeal held that because the complaints could not have been presented during the first weeks of the limitation period, then it did not exempt the ill party from the obligation to present it during the rest of the period of three months because as was explained by Potter LJ giving the only reasoned judgment in the Court of Appeal when he said at page 1210: -

"In assessing whether or not something could or should have been done within the limitation period, while looking at the period as a whole, attention will in the ordinary way, focus upon the closing rather than the early stages. This seems to me to be so where the test to be applied is that of reasonableness or, as here, reasonable practicability."

1. We consider that similar reasoning applies to support the Respondents' case. Thus the Employment Tribunal was entitled to conclude that it was reasonably practicable to have prevented [sic: should be 'presented'] the grievance between 11 and 18 March 2009 when the ET1 was submitted so we reject [Ms Hounga's] complaint'.

1. The EAT turned to the alternative case, which, according to its judgment, was also based exclusively on regulations 11(1) and (3)(b), the 'harassment' point. According to paragraph 59, the argument was similar to that in relation to regulation 6(4)(c), namely that:

'… regulation 11 rather like regulation 6(4) cannot be reversed so that once there was harassment that was determinative and after the end of the period of harassment had finished, [Ms Hounga] was under no obligation to invoke the grievance procedure'.

The EAT rejected that argument too:

'60. We are unable to agree because for the same reason as we have explained in respect of regulation 6(4), the 11(3) exemption only applies for as long as the harassment continues. So therefore in the period between 11 March 2009 and 18 March 2009 the harassment had ceased and [Ms Hounga] could and should have invoked the grievance procedure. The Employment Tribunal was entitled to reach this conclusion and thus this ground of appeal also fails.'

1. Like the tribunal, the EAT made no reference to any argument based on the combined effect of regulations 11(1) and (3)(c). There is, however, no doubt that such an argument was before it. It was raised as a ground of appeal in paragraphs 20 to 22 of the Notice of Appeal; and explained in paragraphs 9 to 17 of Mr Reed's skeleton argument, which asserted that the tribunal had wrongly 'conflated regulation 6(4) and 11(3)(c) in its conclusion'.

B. The arguments on the appeal to this court

1. Mr Reade did not submit that either tribunal below was wrong to hold that Ms Hounga had not made a case under regulation 6(4). He accepted that, as regards regulation 6(4)(c), the tribunal had made a finding of fact as to reasonable practicability that Ms Hounga cannot challenge. Where, however, he said that both tribunals fell into error was in their failure to consider, in answer to the different factual question raised by regulation 11(3)(c), whether it was 'practicable for [Ms Hounga] to commence the procedure or comply with the subsequent requirement within a reasonable period'. That question could not be answered by concluding, as both tribunals did by reference to regulation 6(4)(c), that it was not reasonably practicable to present the grievance for a particular period but that it became reasonably practicable to do so subsequently. The question posed by regulation 11(3)(c) was a different one, namely whether it was practicable to present the grievance within a reasonable period. Had the tribunals asked themselves that question, they must have concluded that an inability to present the grievance for nearly eight months after the dismissal meant that it was not **practicable to do so within a reasonable period. Neither tribunal, however, even referred to the question raised by regulation 11(3)(c). That argument was clearly raised before the EAT and it was not suggested to us that it was not also raised before the tribunal.

1. Ms Prince, in her written argument, conceded that 'it would perhaps have been better [for the EAT] to deal with [the regulation 11(3)(c) argument] more expressly,' but submitted that the EAT had in fact considered and rejected it. Her submission to the EAT was that, in dealing with Mr Reed's submissions in relation to regulation 6(4), the ET had held that it was practicable to present the grievance 'within a reasonable period', a finding of fact which Ms Hounga could not now re-open. By way of support for that submission, Ms Prince relied exclusively on paragraph 12 of the tribunal's reasons for refusing a review (quoted in [14] above). In her oral submissions to us, Ms Prince developed the same argument. Her point came down to the proposition that the tribunal's finding that it was still 'reasonably practicable' for Ms Hounga to present a grievance after 11 March 2009 for the purposes of regulation 6(4)(c) implicitly also carried with it a finding that the 'reasonable period' for the purposes of regulation 11(3)(c) had not yet expired.

1. Mr Reade's alternative argument was based on regulations 11(1) and (3)(b). He pointed out that the tribunal had found as a fact (in paragraph 45) that, during her time with the Allens, Ms Hounga 'had suffered serious physical abuse from [Mrs Allen]'. He submitted that the first condition in regulation 11(3)(b) was therefore satisfied. As for its second condition, he submitted that the tribunal had gone astray in paragraph 15 of its reasons when rejecting the case under regulation 11(3)(b). The tribunal's assumption was that the grievance could be conducted on paper by way of the modified procedure so that there could in practice be no scope for the suffering by Ms Hounga of any repeated harassment. The flaw in its reasoning was, however, that the adoption of such procedure required the written agreement of both sides, whereas there was no basis for the tribunal's assumption that the Allens would have agreed to it.

1. So far as it goes, that is a fair point. Mr Reade's submissions then ran into more difficulty. Assuming that the tribunal had misdirected itself in paragraph 15, what was the evidence before it upon which it ought to have concluded that Ms Hounga had reasonable grounds for the belief that commencing the procedure or complying with its requirements would result in her subjection to further harassment? The question raised by that consideration is shown by regulation 11(4) to be closely dependent on (in this case) Ms Hounga's own perception of the situation, as Mr Reade recognised. No evidence directed to that question was, however, given by her at the original hearing in July 2008, since the jurisdiction issue was not then on either side's radar, nor was there any evidence from her (oral or written) before the tribunal at the hearing of her application for a review.

1. Mr Reade was sensitive to the difficulties presented by this evidential omission but submitted that, as the tribunal's only reasoning in answer to the regulation 11(3)(b) point was wrong, the appropriate course was a remission to it for its reconsideration of the question of whether Ms Hounga ought to be entitled to a review of the section 32 issue on the basis that her case falls within regulations 11(1) and (3)(b). For that purpose, he submitted that she should be at liberty to adduce evidence as to her perception of the harassment risks even though, as Mr Reade recognised, that was evidence that in principle she could have adduced at the hearing of her original application for a review.

1. Ms Prince, in response, submitted that Ms Hounga's omission to adduce any evidence to the tribunal in support of her claimed case under regulation 11(3)(b) meant that there was no basis upon which the tribunal could conclude that a case under that sub-paragraph could be, or might be capable of being, made. It followed that even if the tribunal was wrong in its reasons in paragraph 15, it still arrived at the only conclusion open to it in relation to the regulation 11(3)(b) argument.

C. Discussion and conclusion on Ms Hounga's appeal

1. The issue as to the operation of the grievance procedure appears, on the face of the reasons of the tribunals below, to have been handled unsatisfactorily. First, the tribunal's decision, of its own motion, to dismiss Ms Hounga's non-dismissal discrimination claim because she had not first raised a grievance was unfair. It is agreed that no mention of this issue was made at the substantive hearing. Yet the claim was then dismissed on a ground not taken by the Allens and which Ms Hounga was given no chance to answer. I am not surprised that she sought a review of the tribunal's decision in that respect. Audi alteram partem is a cornerstone of fair procedure in every court and tribunal, but the tribunal overlooked it.

1. More problems, however, lay ahead on the disposition of Ms Hounga's application for a review. It was not suggested to us that Mr Reed did not submit that a 'reasonable period' within the meaning of regulation 11(3)(c) for the presentation of a grievance had elapsed, yet the tribunal made no reference to it. I would reject Ms Prince's submission that the tribunal must be taken to have implicitly considered and rejected that submission by its holding that, following 11 March 2009, it was still 'reasonably practicable' to have presented a grievance for the purposes of regulation 6(4)(c). I regard as wholly fanciful the suggestion that the regulation 6(4)(c) holding carried with it an implied finding that a 'reasonable period' for presenting a grievance for the purposes of regulation 11(3)(c) had not yet expired. The questions posed by regulations 6(4)(c) and 11(3)(c) are manifestly different and the tribunal's finding in relation to the former carried no implied finding in relation to the latter. The tribunal's reasoning for refusing a review is, on its face, less than careful. The reasoning in paragraph 12 was not properly thought through; that in paragraph 15 was flawed; and nowhere is there any reference to regulation 11(3)(c). I am not prepared to infer that the tribunal gave any thought at all to that sub-paragraph, let alone that it considered it and impliedly rejected the case made under it. Unfortunately, the EAT also failed to deal with the regulation 11(3)(c) point, although there is no doubt that it was raised. In my judgment, Ms Hounga is justified in complaining that her case under regulation 11(3)(c) has been wrongly overlooked by both tribunals below.

1. I am, however, wholly unimpressed with her alternative case under regulation 11(3)(b). For reasons given, I consider that the tribunal rejected her argument on mistaken grounds; and, with respect to the EAT's reasons in paragraphs 59 and 60, it appears to me the EAT also failed to engage with the correct questions arising under regulation 11(3)(b). Accepting that, I nevertheless do not see how the tribunal, had it directed itself correctly, could have acceded to the regulation 11(3)(b) argument. Courts and tribunals can only work on the basis of the evidence that is adduced before them. If Ms Hounga intended to make the factual case that she was excused from raising a grievance because her case fell within regulation 11(3)(b), she needed to make that good by adducing evidence to that effect before the tribunal. As she did not, there was nothing before the tribunal justifying it in instituting a review on the regulation 11(3)(b) ground.

1. I would therefore dismiss Ms Hounga's appeal on the regulation 11(3)(b) ground but (subject to what follows) allow it on the regulation 11(3)(c) ground. Mr Reade suggested that, were we of this view, we could and should ourselves answer the factual question as to the 'reasonable period' raised by that sub-paragraph. I would, however, decline that invitation. That question is one of fact in the circumstances of the case and the fact-finding tribunal is the employment tribunal, not the Court of Appeal.

1. The parenthetical qualification in the preceding paragraph picks up Ms Prince's point about the cross-appeal referred to in [6] above. The conventional consequence of the last sentence of the preceding paragraph would be a remission of the regulation 11(3)(c) issue to the tribunal and (depending on the outcome) a determination of the non-dismissal discrimination claim. Her position is that, if the cross-appeal succeeds, the non-dismissal discrimination claim must inevitably fail and so that a remission would be pointless. I will, therefore, break off further consideration of the disposition of the appeal and turn to the cross-appeal.

Mrs Allen's cross appeal

A. The issue and the decisions of the tribunals below

1. Ms Prince challenges the favourable finding that Ms Hounga obtained on her dismissal discrimination claim. In a nutshell, the case is this. Ms Hounga's claim was that her unfair dismissal from employment was racially discriminatory. The unfair dismissal claim itself, and the related claims based directly on the employment contract, were held by the tribunal to have been barred on public policy grounds on the grounds that the employment contract was an illegal one; the EAT agreed with that and Ms Hounga has not sought to challenge those conclusions in this court. So also, Ms Prince says, should Ms Hounga's associated dismissal discrimination claim have been barred on public policy grounds. Like the unfair dismissal claim, the dismissal discrimination claim was inextricably bound up with the illegal nature of her employment. If one deserved to fail on public policy grounds, so did the other.

1. Mr Reade's answer was that that assessment was an over simplification. Ms Hounga's dismissal discrimination claim was based on an independent statutory tort arising under the Race Relations Act 1976. It was a matter for the fact-finding tribunal to assess whether or not it was so inextricably bound up with Ms Hounga's unlawful employment contact as to require it to be barred on public policy grounds. In this case, the fact-finding tribunal held that it was not and it made no error of law in coming to its conclusion. Mr Reade said that this court should take a like view. He said that Mrs Allen's appeal on this ground was in the nature of a perversity appeal, whereas she came nowhere near to scaling the heights necessary for success on such a ground (as to which, see Yeboah v. Crofton [2002] IRLR 634, at [92] and [93], per Mummery LJ).

1. In order to understand how the cross-appeal arises, I must explain the material facts. Mrs Allen is the daughter of Mrs Elizabeth Aboyade-Cole and the brother of Adeniyi Aboyade-Cole ['Adeniyi' may not be the correct spelling but the tribunal uses three different spellings]. Ms Hounga is a young, illiterate person of uncertain age although with a good command of English. She is a Nigerian national and, prior to 2007, was living in Nigeria. From some uncertain date point she lived for some two years in the brother's house there, acting as a family help; and she would from time to time also help the mother on her visits to Nigeria from the United Kingdom, where I understand the mother is resident. The mother, whilst in Nigeria, told Ms Hounga that her daughter in England, Mrs Allen, wanted help looking after her children. Ms Hounga was also told by someone that the family would pay for her travel to England for that purpose. The plan was for her to travel on a six month's visitor's visa, although that would not have given her permission to work. In order to obtain the requisite passport and visa - and assisted in doing so by the Aboyade-Cole family in Nigeria - Ms Hounga made an affidavit before the High Court in Nigeria by which she (i) declared her date of birth to be 28 July 1986 (whereas she told the tribunal that it was 28 February 1993); and (ii) untruthfully declared herself to be Adeyinka Mary Aboyade-Cole. The Aboyade-Cole family then paid for her airline ticket and provided her with a phony letter of invitation to visit her 'grandmother', Mrs Aboyade-Cole, in England for a holiday. At some point whilst Ms Hounga was still in Nigeria, she spoke to Mrs Allen on the telephone, who told her that she would pay her £50 a month for her help in the Allen household.

1. When Ms Hounga arrived in England from Lagos on 28 January 2007, she lied to the immigration officers that she had come here on holiday to visit her grandmother. She was met by Mrs Allen, who took her to her home. Thereafter she worked as an au pair for the Allen family, as had been arranged in Nigeria. The tribunal found the relationship to be an unhappy one, explaining in paragraph 17 the nature of the physical abuse to which Mrs Allen is said to have subjected Ms Hounga. Whilst Mrs Allen denied the allegations, the tribunal found her to have been disingenuous and also to have given dishonest evidence at a prior case management discussion. It found Ms Hounga's evidence to be more credible and, whilst it also found some of her accounts to have been exaggerated, it accepted (in paragraph 45) her evidence that during her stay with the Allens she had suffered serious physical abuse from Mrs Allen. Ms Hounga's allegations included assertions that Mrs Allen would remind her that if she left the house and was found by the police, she would be detained and imprisoned as an illegal immigrant. The dismissal took place on 17 July 2008.

1. The tribunal made specific findings of fact relevant to the cross-appeal. I set out first those in the liability judgment (the tribunal's paragraph numbering is chaotic but is repeated in what follows. I respectfully also comment that it would have been helpful if the tribunal had been less economical in its use of punctuation and had taken the modest trouble to proof read its reasons before issuing them):

'41. We first decide how it was that [Ms Hounga] came to the UK. We find that it was [her] wish to visit the United Kingdom she had worked for the Aboyade-Cole family in Nigeria and got on well with Mrs Elizabeth Aboyade-Cole and when offered the opportunity to come to England to look after [Mrs Allen's] children she expressed a wish to do so, particularly as she was promised that it would give her the opportunity of schooling. We accept that she was told that she would be given £50 a month.

1. We do not believe that [Ms Hounga] on her own would have known how to go about changing her name, applying for a passport and visa and obtaining an aeroplane ticket to enable her to journey to the United Kingdom we have no doubt that the plan was "masterminded" by Mr Edeniyi Aboyade-Cole and the Aboyade-Cole family in Lagos and [Ms Hounga] went along with what was suggested and did what she was told. [Mrs Allen] and her mother Mrs Elizabeth Aboyade-Cole knew what was happening.

1. We have no doubt that the arrangement was that [Ms Hounga] would come to England, live with [the Allens], live as part of the family to help out in the house perhaps have some schooling and be paid £50 plus of course her keep and lodging and that she would look after the children, do some housework in exchange for £50 a month and her board and lodging she would be able to attend a school or college.

1. We believe [Ms Hounga] knew at the time she came to this country or if not certainly shortly after arrival that her permission to enter this country was for six months as a visitor.

1. We are satisfied that whilst she was with [the Allens] [Ms Hounga] helped look after the children, did housework but appears not to have been paid any money. We accept [her] evidence that during her stay with [the Allens] she suffered serious physical abuse from [Mrs Allen]. We find as a fact that [she] lived with [the Allens] from 28 January 2007 until 17 July 2008.

1. We accept that the relationship between [Ms Hounga] and [the Allens] ended in the way described to us by [Ms Hounga] when she was throw out of the house on 17 July 2008.

1. It is not possible for this Tribunal to make a definite finding as to [Ms Hounga's] age but taking note of the evidence which we have that [Ms Hounga] herself said that Mrs Elizabeth Aboyade-Cole had told her that she was 14 but that she must say that she was 20. The reports from the medical experts record that [she] in their view is presently approximately 16 years of age subject to a marginal error of 2 years either way. [She] was in the Tribunal's opinion well aware of her immigration status after the expiry of her visitors visa which would have expired round about the end of July 2007 …. It was the fact that [she] was in this country illegally after July 2007 that gave [the Allens] the power and control over [her] by threatening that if she was noticed by the authorities then she would likely be imprisoned.

1. We accept that [Ms Hounga] did not have any understanding of potential rights she may have under UK employment legislation.

1. [Ms Hounga] went along willingly with all the arrangements that were necessary to bring her to the United Kingdom she wanted to come, she wanted the opportunity to attend school, [she] is a Christian and attended church regularly in Lagos she would know the difference between right and wrong. She knew that the arrangements which were made whereby she had to pretend to be a relative had to use the name other than her own name and that she had to falsify where she was born and her date of birth so must have known that the arrangements were dishonest. …

1. So far as the race discrimination claim relating to dismissal is concerned we consider it just and equitable to extend time.

1. [Ms Hounga] arrived in this country on a visitors visa and thus did not have the right to work in this country it was illegal for her to work. Does that illegality prevent [her] from claiming that she was "in employment" and thus claiming protection of the Employment Rights Act 1996 and the Race Relations Act 1976.

1. We find that [Ms Hounga] was an employee ….

1. The Tribunal are satisfied that [Ms Hounga] did know and understand that she did not have the right to work in this country and we find that as the contract was illegal she is not entitled to benefit therefore and cannot bring her claim of unfair dismissal or any claims which arise under a contract of employment.

1. We now move to the question of whether [Ms Hounga] was discriminated against on the grounds of race.

1. [The Allens] employed [her] because as a Nigerian or a resident in this country illegally [she] was vulnerable and could be treated less well because of her inferior situation having no rights to be in the country and no legal right to be employed.

1. The relevance of the employee's race was that she came from a country (Nigeria) or (Benin) which did not have automatic right to work in the United Kingdom so could be less favourably treated with impunity.

1. There was no valid reason given by [Mrs Allen] for the termination of [Ms Hounga's] employment we find that [the Allens] dismissed [her] and ill treated her because of her status: she had no rights. We find that [the Allens] would not have dismissed a hypothetical comparator i.e. a British based person working for [them] and we find [Ms Hounga's] dismissal an act of unlawful direct race discrimination'.

1. The tribunal, unhelpfully, provided no explanation as to why, although it was rejecting Ms Hounga's claims on public policy grounds insofar as they arose under her contract of employment, it upheld her claim that her dismissal from her employment was a discriminatory act for which she was entitled to compensation. In giving its reasons following the subsequent remedy hearing, the tribunal also made the following findings:

'6. … the parties in this case (not Mr Allen) agreed to a course of dishonest conduct to enable [Ms Hounga] to obtain travel documents and subsequently the appropriate visa to gain entry into this country from Nigeria so that she could live with [the Allens].

1. As part of that process [Ms Hounga] swore a solemn declaration before the High Court of Nigeria that she was Adenike Mary Aboyade-Cole a passport was then issued in her name a visa was obtained from the British Embassy from Nigeria, [she] attended in person at the Embassy accompanied by the Nigerian family's driver, [she] confirmed that she told the Embassy officials that the purpose of the visit was to enable her to visit the United Kingdom for a holiday to see her grandmother.

1. [She] well knew that was untrue first she was not visiting for a holiday and secondly she had no grandmother in the United Kingdom to visit. [She] confirmed to the Tribunal at the Remedy Hearing that had she not have told these lies and thus not obtained a visa to enter the United Kingdom then she would have stayed in Nigeria she accepted that had she have told the truth then she would not have been granted a visa and allowed to come to the UK. …

1. [Ms Hounga] was extremely concerned, about what might happen to her when the events terminating her "employment" occurred. It is clear as we previously found that she well knew that especially after the six month period that she was in the country unlawfully and for that reason we can understand her fear of the Police and the authorities ….

1. There was no doubt that [she] suffered a traumatic experience being treated in the way in which she was when her relationship with [the Allens] ended and this was exacerbated by [her] own concerns of her illegal position and the fact that she was in the country unlawfully.

1. … [Ms Hounga] came to this country knowing she did not have the right to work she came to live with [the Allens] she knew she had no legal right to work and after six months no legal right to remain….

1. … [the Allens] lied in the first instance then lied again, different lies, put simply [they] lied, lied and lied again but on the other hand [Ms Hounga] does not come to this Tribunal wholly innocent in these matters she too lied in the process and we do not accept that there was any pressure put on her to come to this country she was a willing party. …'

1. Finally, Ms Prince drew our attention in particular to paragraph 37 of the EAT's judgment, in which it said that:

'… [Ms Hounga] participated in and benefited from the illegality as it enabled her to come to this country. …'

1. Although we do not have the benefit of the tribunal's reasoning for accepting Ms Hounga's non-dismissal discrimination claim, we do have the benefit of the EAT's reasons for upholding the tribunal's decision to that effect. The lack of reasons from the tribunal would, by itself, probably have been sufficient to achieve a remission back to the tribunal from the EAT for the tribunal to do the job properly. Sensibly, however, the parties invited the EAT to decide whether, on the basis of the tribunal's primary findings of fact, the dismissal discrimination claim was or was not barred, and the EAT duly did so. In effect, therefore, the EAT became, by the parties' consent, in this respect a fact-finding tribunal, although its fact-finding role was confined to forming a judgment on the relevant issue by reference to the tribunal's primary findings of fact. Before, however, I come to the EAT's reasoning, I shall refer to two leading authorities relevant to the question, both of which were cited to both tribunals below and knowledge of which is essential to an understanding of the EAT's reasoning.

1. The first is the decision of the Court of Appeal in Hall v. Woolston Hall Leisure Ltd [2001] ICR 99. Ms Hall asserted that she had been discriminated against on the grounds of sex by being dismissed by reason of her pregnancy. Her liability claim succeeded. At the remedy hearing, at which her claim for lost earnings was in issue, the payslips that were produced showed her gross pay as £250 a week, whereas the pleadings had shown that as her net pay. The explanation was that she had earlier asked for a rise to £250 a week net and had received it. Her payslips, however, showed her net pay as £186.65 after deductions of £63.35. She had noticed that her payslips had been so made up and had queried it with the employer who explained that 'It's the way we do business.'

1. The outcome was that the tribunal held that the employment contract was tainted with illegality: the employer was not paying tax on part of Ms Hall's income, to which she was turning a blind eye, knowing that the Revenue was being defrauded. The tribunal held that in consequence (a) she was not entitled to enforce the employment contract whilst it was still current, (b) nor was she entitled to do so when it was brought to an end, (c) nor was she entitled to compensation under the Sex Discrimination Act 1975 for earnings lost by her discriminatory dismissal, although she was entitled to compensation for injury to feelings.

1. Ms Hall's appeal to the EAT was dismissed by His Honour Judge Clark and members ([1998] ICR 651). Her case proceeded to the Court of Appeal, which allowed her appeal and upheld her claim for compensation for lost earnings. Peter Gibson LJ delivered the lead judgment. At [29] to [38], and although the claim in issue was not one to enforce a contract, he considered the bases upon which the defence of illegality will be an answer to such a claim. He explained that it will provide an answer in cases in which (i) the contract is entered into with the intention of committing an illegal act; (ii) the contract is prohibited by statute; and (iii) the contract, although lawful when made, is illegally performed and claimant party knowingly participated in the illegal performance. At [32] and following, Peter Gibson LJ explained how in the employment field, and in the third category of case, the test of knowledge plus participation has been recognised for illegality to be a defence.

1. At [39] and following Peter Gibson LJ turned to illegality as a defence in relation to a claim in tort. That was the key question in Hall's case, in which the dismissal sex discrimination claim was based on a statutory tort created by the Sex Discrimination Act 1975. He referred to various authorities showing that, for the illegality defence to be available to a claim in tort, there must be a causal link between the illegality in which the claimant is implicated and the loss of which he is complaining. He summarised as follows the principle by reference to which the appeal fell to be decided:

'42. … It therefore follows that the correct approach of the tribunal in a sex discrimination case should be to consider whether the applicant's claim arises out of or is so clearly connected with or inextricably bound up or linked with the illegal conduct of the applicant that the court could not permit the applicant to recover compensation without appearing to condone that conduct.'

1. It was accepted before us that a like principle applies in a race discrimination case. Peter Gibson LJ referred, with approval, to the earlier EAT decision of Leighton v. Michael [1995] ICR 1091. That was factually very similar to Hall's case. It was also one in which the employer, to the knowledge of the claimant employee, failed to make deductions from her wages and was therefore, also to her knowledge, engaged in a fraud on the Revenue. She left her employment and brought claims for sexual harassment and victimisation on the ground that she was dismissed because her solicitors wrote a letter of complaint just before she left. The employment tribunal dismissed her claims on the basis that she was not entitled to rely on her employment contract by reason of the illegality, to which she was a party. The EAT, in a judgment delivered by Mummery J, as he then was, allowed her appeal. He distinguished cases in which an illegal contract of employment had been held to disqualify applicants for unfair dismissal and redundancy payments, saying (at 1098):

'11. Protection under the 1975 Act against sex discrimination involves a reference to the contract to determine whether the person is "employed" within the meaning of the statute, but the claim of sex discrimination does not involve enforcing, relying on or founding a claim on the contract of employment. In brief, the right not to be discriminated against on the ground of sex is conferred by statute on persons who are employed. There is nothing in the statute to disqualify a person, who is in fact employed, from protection by reason of illegality in the fact of, or in the performance of, the contract of employment. There is nothing in public policy to disqualify a person from the protection of the statute, if the claim to the statutory protection is not founded on, or is not seeking to enforce, contractual obligations.'

1. Peter Gibson LJ agreed with that statement of principle and further explained it in his own words as follows:

'46. It is undoubtedly correct that, where the complaint is of sex discrimination by dismissing an employee, the employee must establish that she was employed and was dismissed from that employment, so that to that extent reliance must be placed on the contract of employment. But, in my judgment, it could not properly be said that the complaint of sex discrimination by dismissal was based on the contract of employment, still less that her claim of such discrimination was so closely connected with inextricably bound up or linked with the acquiescence by the employee in the unlawful failure by the employer to deduct PAYE and national insurance contributions that the court would be seen to be condoning unlawful conduct by the employee. It is the sex discrimination that is the core of the complaint, the fact of employment and the dismissal being the particular factual circumstances which Parliament has prescribed for the sex discrimination complaint to be capable of being made. The illegality consists only of the employer's mode of paying wages. In my judgment, Leighton v. Michael [1995] ICR 1091 was rightly decided and the awareness of the employee that the employer was failing to deduct tax and national insurance contributions and to account to the revenue does not of itself constitute a valid ground for refusing jurisdiction.

1. In the present case the employment contract of Mrs Hall at its inception and on its variation when she successfully bargained for increased wages on her promotion was entirely lawful. It did not incorporate a term that adopted the subsequent illegality. When on performance of the varied contract by the employer the illegality appeared in the form of the false payslip, Mrs Hall queried it. The obligation to pay PAYE and national insurance contributions rested on the employer, in the absence of a direction from the revenue that Mrs Hall was to account for the tax and national insurance contributions: see Inland Revenue Comrs v. Herd [1993] 1 WLR 1090. There was no active participation by her in the illegality. With the aid of counsel we have considered whether Mrs Hall was guilty of any illegality under the fiscal legislation or at common law by reason of the offence of cheating the public revenue, but I have seen nothing that shows that she herself was guilty of any unlawful conduct. No benefit is shown to have been received by her from the employer's failure to deduct tax and national insurance contributions and to account for the same to the revenue. Her acquiescence in the employer's conduct, which is the highest her involvement in the illegality can be put, no doubt reflects the reality that she could not compel the employer to change its conduct. That acquiescence is in no way causally linked with her sex discrimination claim. In the circumstances it would seem to me to be deplorable if someone in the position of Mrs Hall were left by English law unable to enforce her statutory claim. I am glad to be able to reach the conclusion that that is not the law and that public policy does not so require.'

1. Mance LJ, as he then was, in a very full judgment, agreed with Peter Gibson LJ. He said, at [79], that while the underlying test remained one of public policy, the test required an inextricable link between the facts giving rise to the claim and the illegality before any question arises of the court refusing relief on the grounds of illegality. 'In practice, as is evident, it requires quite extreme circumstances before the test will exclude a tort claim'. At [80], he agreed with Peter Gibson LJ that both tribunals below had been in error in holding that Mrs Hall had been so involved in the illegality as to prevent her from enforcing her contract of employment by any contractual claim. Her contract, both as made and as varied, had been legal, with the suggested illegality arising simply from the method of performance and:

'Before this could disable the employee from enforcing her contract of employment, there would … have to be shown both knowledge and participation on her part in the illegal method of performance'.

1. Moore-Bick J, as he then was, also agreed, saying:

'83. I also agree … that Leighton v. Michael [1995] ICR 1091 was correctly decided and that even if Mrs Hall would have been prevented by reason of illegality from enforcing her contract of employment as such she would none the less be entitled to recover substantial compensation for wrongful discrimination under the Sex Discrimination Act 1975.'

1. Hall's case therefore shows that the fact that the employee may be barred by illegality from enforcing her contract of employment will not automatically lead also to the conclusion that she will be barred from claiming compensation for a discriminatory dismissal from her employment. The former question engages a consideration of the circumstances in which a contractual claim will be barred by illegality, the latter engages consideration of the circumstances in which a tort claim will be so barred.

1. The second authority is Vakante v. Governing Body of Addey and Stanhope School (No 2) [2005] ICR 231, also a decision of the Court of Appeal. The lead judgment, with which Lord Slynn of Hadley and Brooke LJ agreed, was delivered by Mummery LJ. The claimant was a Croatian national who had been resident in the United Kingdom since 1992. In 1999 he applied to the employer for a post as a maths teacher, falsely indicating that he did not need a work permit, whereas in fact the Home Office had informed him that he could not work here without a permit. He began his employment, was dismissed eight months later and brought a tribunal claim for race discrimination (including dismissal on racial grounds) and victimisation. The employer promptly objected that the claims were so inextricably bound up with the claimant's illegal conduct that no claim should lie, an objection upheld by the tribunal and the EAT. The claimant appealed to the Court of Appeal, which dismissed his appeal.

1. Mummery LJ referred, at [2], to Hall's case and said that:

'… the defence of illegality is an appeal to a self-evident legal principle or policy that justice, and access to it, does not require courts and tribunals to assist litigants to benefit from illegal conduct, if it is inextricably bound up in their claim.'

He referred, at [7], to the statement of principle set out by Peter Gibson LJ in Hall's case and said:

'8. The strength of the Hall approach is that it is flexible. It enables the tribunal to avoid arbitrary and disproportionate outcomes and to reach sensible and just decisions in most cases. The proper application of the test should produce reasonably consistent and predictable results, more so, I am inclined to think, than would be the case if, in cases of illegal conduct involving the applicant, the tribunal were given a general statutory discretion, constrained by specific limiting factors.

1. Although Hall's case [2001] ICR 99 uses some of the familiar language of legal and factual situation ("connection", "link"), the test does not restrict the tribunal to a causation question. Matters of fact and degree have to be considered: the circumstances surrounding the applicant's claim and the illegal conduct, the nature and seriousness of the illegal conduct, the extent of the applicant's involvement in it and the character of applicant's claim are all matters relevant to determining whether the claim is so "inextricably bound up with" the applicant's illegal conduct that, by permitting the applicant to recover compensation, the tribunal might appear to condone the illegality'.

1. In order to see why the outcome of Vakante's case was so different from Hall's case, it is worth quoting from Mummery LJ's conclusions for the court's decision:

'33. The application of the Hall approach to this case is comparatively straightforward. This case is clearly different from Hall [2001] ICR 99 and similar cases, in which (a) the illegal conduct was that of the employer in the performance of the contract; and (b) the involvement of the applicant was one of awareness of the employer's illegal conduct and in deriving benefit from it. It is not a case where the applicant has been working in good faith in the belief that it was lawful for him to work: Still v. Minister of National Revenue [1998] 1 FC 549, a Canadian case concerning entitlement to state benefits during employment which was believed to be lawful, but was unlawful for want of a work permit.

1. As for the illegal conduct here: (a) it was that of the applicant; (b) it was criminal; (c) it went far beyond the manner in which one party performed what was otherwise a lawful employment contract; (d) it went to the basic content of an employment situation – work; (e) the duty not to discriminate arises from an employment situation which, without a permit, was unlawful from top to bottom and from beginning to end.

1. It was not a case of innocent oversight or an acceptable misunderstanding. The applicant had been clearly informed in writing of the true position. Instead of making an application for a work permit, he obtained work with the employer by making a false statement. The applicant was solely responsible for his illegal conduct in working for the employer and creating an unlawful situation, on which he had to rely in order to establish that there was a duty not to discriminate against him. …

1. I agree with the employment tribunal that the complaints by the applicant of his discriminatory treatment in employment are so inextricably bound [up] with the illegality of conduct in obtaining and continuing that employment with the employer that, if it were to permit him to recover compensation for discrimination, the tribunal would appear to condone his illegal conduct. …'

1. Reverting now to the EAT's reasons for upholding the dismissal discrimination claim, the EAT explained its decision between paragraphs 38 and 48 of its judgment. Ms Prince's submission to the EAT had been that the employment contract was unenforceable as falling either into the first or third category identified in Hall's case (see [42] above). Mr Reed's counter-submission was that the relevant test was the tortious test, as explained by Peter Gibson LJ in Hall's case, at [42], and the EAT agreed. Ms Prince relied on Vakante's case but the EAT regarded it as a very different case. There the employer was totally innocent of the illegality – it did not know the employee was not entitled to work – and (as Mummery LJ said at [35]) – the employee had been solely responsible for the illegal contract and creating the unlawful situation upon which he had to rely in his case before the tribunal.

1. The EAT's conclusion was as follows:

'48. The differences between the Vakante case and the present one are clear because in this case, the focus has to be on the Respondent's conduct in dismissing and evicting [Ms Hounga]. Such conduct of [Mrs Allen] is not connected with or inextricably linked with the illegal conduct by which [Ms Hounga] entered this country and worked here. [Ms Hounga's] position as a servant of the Respondent working and living illegally in this country was not inextricably linked with the act of eviction or dismissal. In any event applying Mummery LJ's approach, [Ms Hounga's] involvement in the illegality was much less than that of the Respondent. We have come to the conclusion that the Employment Tribunal were entitled to take the view that this case does not fall within what Mance LJ considered to be "quite extreme circumstances before the test will exclude a tort claim". Indeed by allowing [Ms Hounga] to recover compensation for this claim, the Employment Tribunal would not in Peter Gibson LJ's words in the Hall case be "appearing to condone" the illegal conduct of [Ms Hounga]. We have come to the conclusion that the Employment Tribunal was entitled to uphold this claim and so we reject this ground of appeal.'

1. Ms Prince criticises that reasoning as erroneous. First, the present case is, she said, materially distinguishable from Hall's case. There the employment contract was lawful both when made and when varied. The illegality was confined to the employer's performance of it. Although the employee was aware of it, she did not participate in it and was not herself guilty of any illegality. It appears that the Court of Appeal may not even have regarded the illegality affecting the contract as preventing her from enforcing it. Nor was her independent tortious claim for discrimination so inextricably bound up with the illegality affecting the contract that she was barred from bringing it. The allowing of such claim could not amount to the condoning of any illegal conduct on her part when there was none.

1. Ms Prince pointed out that Vakante's case, where the result was strikingly different from that in Hall's case, was a very different one, as Mummery LJ explained at [35]. The illegality there was that of the applicant; it was criminal; it went far beyond the manner in which one party performed what was otherwise a lawful contract; it went to the basic content of the employment situation, namely work; the duty not to discriminate therefore arose out of an employment situation which, without a permit, was unlawful from top to bottom and from beginning to end. Ms Prince pointed to the close similarities between this case and Vakante's case and submitted that the present case is not relevantly distinguishable. As in Vakante, Ms Hounga was guilty of unlawful conduct. She made a dishonest declaration as to her age and name and purpose of her visit to the United Kingdom in order to obtain a visa. She knowingly agreed to enter into an employment contract with the Allens that was illegal, since, as she knew, she had no right to work here and no right to stay here for more than six months. Her employment contract was as illegal as that in Vakante's case. The only real difference from Vakante's case is that in her case the employers were equally parties to the illegality.

1. Ms Prince also submitted that the EAT was wrong to focus, as it did at [48], on the question of whether Mrs Allen's conduct in dismissing the applicant was or was not connected or inextricably linked with the illegal conduct by which Ms Hounga entered this country and worked here. The relevant question requires a focus on the claimant's conduct, and in particular requires an examination of whether her claim is so inextricably linked with her illegality in obtaining and continuing in the employment that the court would be seen to be condoning that illegality by acceding to it. The test, as explained in Hall's case, does not require focus on the conduct of the respondent.

1. Mr Reade, in response, was initially disposed to submit that the employment contract was lawful in its inception but was merely performed illegally. He later, however, either accepted that it was illegal in its inception or at least that he was content to argue Ms Hounga's case on the basis that it was so illegal. He developed the submission that the statutory tort upon which Ms Hounga was advancing her claim anyway stood independently both from her contractual claim to enforce her employment contract and her statutory right not to be unfairly dismissed from such employment. He placed heavy reliance on Hall's case, and also on Leighton v. Michael [1995] ICR 1091 which was approved in Hall's case, and advanced those authorities as providing clear support for Ms Hounga's entitlement to be allowed to pursue her dismissal discrimination claim. The essence of his submission came down to the proposition that the tortious discrimination claim is quite independent of any contract claim and any illegality affecting the contract will not, without more, prevent the bringing of the independent tort claim. Mr Reade, perhaps understandably, devoted but scant attention to Vakante's case, and the different result to which the Court of Appeal there arrived, submitting that it was a decision that turned on its own facts.

Discussion and conclusion

1. The disposition of a particular case turns on the application to it of the relevant principles. There is no doubt that Hall's case establishes the relevant principles. I have summarised them above. Their application required Hall's case to be decided one way and Vakante's case another way. The different outcome in the two cases is unsurprising. In Hall's case the claimant was - at most – only on the very fringe of the illegality tainting her employment contract. She was aware of the employer's illegal performance of it, but was not herself participating in it and could in practice do nothing about it. The court's assessment was that, on the facts, it could not be said that her complaint of her discriminatory treatment was so inextricably tied up with her acquiescence in the employer's illegal conduct that to permit her to pursue her claim would amount to condoning unlawful conduct by her. The illegality related only to the employer's mode of paying her wages, whereas the core of her complaint was in no manner related to that: it was based on sex discrimination. The court effectively acquitted her of any illegal conduct at all and the decision was therefore an unsurprising one.

1. The outcome in Vakante's case was that Mr Vakante's claims, including his dismissal discrimination claim, were held to be barred on public policy grounds. The facts could not have been more different from those in Hall's case. That was not a case where the employment contract was lawful at its inception and where the illegality related merely to one aspect of the employer's performance of it, being an aspect in which the employee did not participate. Mummery LJ spelt out in his judgment, at [33], the factual distinctions between Hall's case and Vakante's case. He then explained that the vice in Vakante's case was that the whole employment relationship had been achieved by Mr Vakante's dishonest and criminal conduct; with the result that 'the duty not to discriminate [which Mr Vakante was claiming to enforce] arises from an employment situation which, without a permit, was unlawful from top to bottom and from beginning to end' (per Mummery LJ at [34]).

1. Almost exactly the same can be said about the employment situation in this case. The employment contract was, in my judgment, illegal in its inception since it was a contract for Ms Hounga to work in the United Kingdom when both parties knew that she was not entitled to work here. The only difference from Vakante's case is that whereas in that **case the employers were innocent of any illegality, the Allens in this case were equal participants with Ms Hounga in the entry into the illegal employment contract. If in the circumstances of his case, Mr Vakante was debarred from claiming in respect of his employer's alleged tortious discriminatory dismissal of him from the illegal contract under which he was employed, I do not understand how, on the tribunal's findings as to Ms Hounga's knowledge of and participation in the illegal employment contract by which she was retained, she can be in a better position.

1. I would not regard her as being in a better position. I referred, at the end of [35] above, to the nature of the case that Ms Hounga was making. At [36] above, I quoted paragraph 37 of the tribunal's reasons, in which the tribunal made its finding as to the Allen's power and control over her; and I also there set out paragraphs 50 to 53 of the tribunal's findings as to manner in which the Allens discriminated against Ms Hounga on the grounds of race. Those references show how Ms Hounga's dismissal discrimination case was dependent upon the special vulnerability to which she was subject by reason of her illegal employment contract: she was relying on the facts that she was an illegal immigrant, had no right to be employed here, effectively had no rights here at all and so could be treated less well because of her inferior situation. In making good her dismissal discrimination case she was therefore directly invoking and relying upon the fact that she was here illegally and had been working illegally for the Allens. She was making a direct link between the discriminatory treatment of which she complained and the circumstances in which she came to be, and was, employed by the Allens. To the question whether her discrimination claim arose out of, or was clearly connected or inextricably bound up or linked with her own illegal conduct, the answer is, I consider, obviously 'yes'. In my judgment her claim to recover compensation for dismissal discrimination is plainly barred by the principles explained in Hall's case and applied in Vakante's case. If this court were to allow her to make that case, and so rely upon her own illegal actions, it would be condoning her illegality. That is something the court will not do.

1. For these reasons, I respectfully regard the EAT's different view in paragraph 48 of their judgment as wrong. First, there is no material difference between the features of Vakante's case and the present case. Second, whilst the focus on a discrimination claim of course has to be on the conduct of the alleged discriminator, Ms Hounga's dismissal discrimination case positively linked that conduct with her own illegal conduct, a consideration that the EAT appears to have overlooked. Third, I respectfully regard it as insufficient for the EAT to assert that Ms Hounga's involvement in the illegality was much less than that of the Allens. That is not of course to say that the tribunal does not have to scrutinise the extent to which the claimant has been engaged in any illegality, as Hall's case makes clear. In this case, however, whilst one inevitably has sympathy for Ms Hounga as a young person of whom unfair advantage was probably taken, there is no escaping the tribunal's findings that she knew what she was doing and knew it to be wrong and illegal. Whichever party bore the greater responsibility for making of the illegal contract, she was a willing participant in it. Fourth, for reasons given, for a tribunal to accede to her discrimination claim would be to condone her own illegality, since that illegality formed a material part of her dismissal discrimination case.

1. In my judgment, therefore, the EAT's disposition of this particular issue was, with respect, flawed and wrong. Its error was its omission to recognise the factual basis of Ms Hounga's dismissal discrimination claim and the tribunal's findings in relation to it that I have summarised in [62] above and to bring them into account in its assessment as to whether to allow Ms Hounga's dismissal discrimination claim would be to condone her illegal conduct. In my judgment, once those matters are brought into account, the only possible answer is that to allow Ms Hounga's dismissal discrimination claim would be to condone her illegal conduct.

1. I would therefore allow Mrs Allen's cross-appeal and set aside paragraph (2) of the tribunal's judgment signed on 6 August 2009 and also the tribunal's consequential award of compensation and interest made by its further judgment signed on 16 April 2010.

Disposition of appeal and cross-appeal

1. Formally, therefore, I would allow Ms Hounga's appeal as indicated in [30] above and also allow Mrs Allen's cross-appeal as just indicated. I have explained that Ms Prince submitted that there can be no point in remitting the grievance issue arising under regulations 11(1) and (3)(c) to the tribunal, since the (if any) substantive decision on Ms Hounga's non-dismissal discrimination claim must, for like reasons, be the same as that in respect of her dismissal discrimination claim. The court asked Mr Reade whether, were the cross-appeal to succeed, he would agree with Ms Prince's assessment. His response was that the non-dismissal discrimination claim would raise strictly different questions but that in practice it would necessarily follow that it could not succeed. I regard that as a fair assessment and I agree with it.

1. In the circumstances, I would allow both the appeal and cross-appeal as indicated, but would wish our order to provide that there is to be no remission of any issue to the tribunal and that Ms Hounga's non-dismissal discrimination claim is dismissed.

Sir Scott Baker :

1. I agree.

Lord Justice Longmore :

1. I agree also.