Employees (but not workers, as the law currently stands) have the right not to be unfairly dismissed by their employer. This is subject in most cases to them having the requisite qualifying period of continuous service (one year in the Isle of Man).
When dismissing an employee, an employer must show that the reason or principal reason for the dismissal is one of the potentially fair reasons set out in the Employment Act 2006. One of these is that the employee could not continue to work in the position which they held without a duty or restriction imposed by or under a statutory provision being contravened (whether by themselves or their employer)[1], also known as “illegality”.
The English case of Hall v Woolston Hall Leisure Ltd[2] established three categories of illegality which could lead to a contract being unenforceable:
- a contract entered into with the intention of committing an illegal act – occurs when the parties to the contract enter into it with the intention of committing an illegal or immoral act;
- a contract prohibited by statute (“statutory illegality”) – occurs where it would be illegal for the employee to begin or carry on working in their job and consequently, they cannot fulfil their contract. In regard to an existing arrangement, the employer must show that the continued employment would actually contravene a statutory restriction; it is not enough that the employer merely believed that continued employment would be illegal. Examples might include an employee losing their right to work in the Isle of Man, a regulatory prohibition which prevents an employer from continuing to employ an individual in a specific role or where an employee’s job involves them driving and they are disqualified[3];
- a lawful contract performed in an illegal way (“illegality in performance”) – this is where a contract is lawful when entered into, but then performed in an illegal manner. For example, an individual and/or their employer represents the individual’s status as that of self-employed when it is not or an employee is paid part of their salary in cash to avoid income tax and NICs. In these examples, the contract itself is perfectly legal but an aspect of its performance is not. Whilst an initial concern relates to the enforceability of the obligations between the parties, the employer in this case would likely have bigger problems with the authorities to face!
Right to work documents for immigration purposes
An employer who engages an individual in the Isle of Man is strongly advised to undertake “right to work” checks which, if performed correctly, provide a statutory defence against a conviction for employing a person illegally[4]. An offence is not committed if the employer checks and records certain specified documents before employment begins, demonstrating that the individual has the right to work in the Isle of Man.
Whilst employers in general do not break the law if they fail to carry out a check on a particular individual, an employer does run the risk of a conviction and fine if the employee is identified as working illegally. It is therefore advisable that an employer undertakes the relevant checks to ensure that the individual is eligible to be employed.
An employer cannot generally rely on the ground of statutory illegality when dismissing an employee for failing to produce right to work documents if there is no requirement on an employer to obtain certain documents, just the possibility of offences being committed to which a defence will not be available if certain documents are not obtained. If is not sufficient that the employer genuinely believes that continued employment would contravene a statute, but rather the employment must contravene statute as a matter of fact. In such circumstances, however, an employer’s belief could amount to “some other substantial reason” and therefore be a valid reason for termination (see separate note on “SOSR”).
The situation is different, however, where the employee’s immigration status changes during employment and they no longer have the appropriate permissions to continue working in the Isle of Man. In such circumstances, if an employer becomes aware that the employee has lost the right to work in the Island, the employer should investigate the reasons as to why the position has changed and advise the employee to take steps to regularise their immigration status. The employer may ultimately need to terminate the employee’s employment for illegality if the right to work issues cannot be resolved and it is not possible to continue employing them lawfully.
Work permits and legal working
In the Isle of Man, even if an employer is not committing an offence under immigration laws by employing someone[5], they may still be committing an offence if that person is not an Isle of Man worker and needs, but does not have, a valid work permit granted by the Department for Enterprise. The holders of some types of immigration employment document (i.e. certain visas) do not also need an Isle of Man work permit, and there are other possible exemptions, but it is always advisable to check in order that neither party (employer or employee) will fall the wrong side of the law by entering into an employment relationship.
Usually, an employer will be involved in applying for a work permit on the employee’s behalf so will be aware of the situation in terms of the initial grant and subsequent expiry/need to renew a permit. Systems and reminders do need to be in place to pick up renewals, however, and copies of the appropriate paperwork (including, importantly, the work permit itself) kept on file.
Tips for employers
When making offers of employment and sending out contracts for new starters, it is advisable to make these “subject to any necessary immigration permissions or work permit being obtained”. Ongoing monitoring for any changes to legal working status is also an essential part of an HR compliance programme as is an awareness of anything which could affect the employee lawfully carrying out part of their job role (e.g. such as if they are disqualified from driving or where a licence is withdrawn for medical reasons). Hiring managers additionally need to be aware of conditions subject to which employment offers should be made and any necessary checks or steps which ought to be undertaken to ensure the company or the individual is not facilitating/committing illegal working or another type of offence.
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References:
[1] Section 113(2)(d) of the Employment Act 2006
[2] [2001] 1 WLR 225
[3] St-Hilaire v Keltbray Ltd [2019] – An employment tribunal in England and Wales held that the absence of a HGV licence was a valid ground for a statutory illegality dismissal where the employee was employed as a HGV driver. The tribunal reminded employers that in such cases they are under a duty to investigate whether suitable alternative employment is available for an employee.
[4] See: https://www.gov.im/media/1376881/immigration-restrictions-on-employment-order-2021-sd-2021-0170.pdf
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Useful resources:
See note on immigration and work permits.