Enfield Technical Services Ltd v Payne; Grace v BF Components Ltd [2008] EWCA Civ 393
Illegality in employment contracts
Contracts generally may be void for illegality. In the employment sphere, if the contract is void for illegality then the ’employee’ will not be able to claim for breach of that contract, for example in cases of wrongful dismissal, or for unfair dismissal. The nature of the illegality necessary to render the employee outwith of employment protection was considered by the Court of Appeal.
The appellant employers in these joined proceedings appealed against an EAT decision that the employees had not acted illegally in the performance of their contracts The employees (P and G) had worked on a self employed basis and were treated as such by the Inland Revenue. They later claimed unfair dismissal, arguing that they were really employees, rather than self-employed.
The EAT found that they were employees but had believed in good faith that they were self-employed and had not made misrepresentation to the Inland Revenue, and were entitled to claim unfair dismissal. The employers claimed that as the employees had participated in an illegal performance of th contract, they were not entitled to protection.
The Court of Appeal dismissed the appeal. The employees were entitled to claim unfair dismissal. The employees had committed ‘insufficient’ illegality. A contract of employment may be unlawfully performed if there are misrepresentations as to facts. However, that is distinguishable from an error of categorisation which is unaccompanied by false representations, as had occurred in this case.
Updated 19 March 2026
This article accurately summarises the Court of Appeal’s decision in Enfield Technical Services Ltd v Payne; Grace v BF Components Ltd [2008] EWCA Civ 393. The core legal principles described remain good law. The distinction between illegality arising from deliberate misrepresentation and a genuine error of categorisation — and its effect on an employee’s ability to claim unfair dismissal — continues to reflect the position in English employment law.
Readers should note that the broader area of illegality in contract has developed further since 2008. In particular, the Supreme Court in Patel v Mirza [2016] UKSC 42 restated the approach to illegality in civil law generally, favouring a range-of-factors analysis over rigid rules. While Patel v Mirza was a contract law case rather than an employment case, its reasoning has had some influence on how illegality defences are assessed. Employment tribunals and courts have continued to apply the principles from Enfield/Grace in the employment context, but practitioners and students should be aware of this wider development. The article does not address this subsequent case law, which is a limitation for those researching the current state of the illegality doctrine more broadly.
