Claimant's Claims Struck Out Due to Illegality in Contractual Arrangements

OUTCOME: Struck Out

Case Number: 6006541/2026

1 of 15

EMPLOYMENT TRIBUNALS Heard at: London South On: 1 and 2 June 2026

Claimant: [redacted] Respondents: [redacted] (2) [NAME]: Employment Judge Ramsden Representation: Claimant In person Respondent Mr [COUNSEL], Counsel

JUDGMENT ON A PRELIMINARY ISSUE 1. The Claimant’s complaints: a) That he was unfairly dismissed by the First Respondent pursuant to sections 94 and 98 of the Employment Rights Act 1996 (the 1996 Act); b) That he was automatically unfairly dismissed by the First Respondent for the sole or principal reason that he had made a protected disclosure pursuant to section 103A of the 1996 Act; c) That he was wrongfully dismissed by the First Respondent; d) That the First Respondent made unauthorised deductions from his wages in breach of section 13 of the 1996 Act; e) That the First Respondent breached the contract of employment between it and the Claimant by failing to pay the outstanding sums under his car lease agreement; and

Case Number: 6006541/2026

2 of 15

f) That the First Respondent breached the service agreement between it and the Claimant by removing him as a statutory director without following due process, are struck-out pursuant to Rule 38(1)(a) of the Employment Tribunal Procedure Rules 2024 (the [NAME]) as being scandalous.

2. The Claimant’s complaints that he was subjected to detriments on the ground that he had made a protected disclosures contrary to section 47B of the 1996 Act remain and will proceed to be determined, as will the First Respondent’s Counterclaim. WRITTEN

REASONS Key facts 3. The Claimant worked for the First Respondent from 18 January 2021 until 1 March 2024.

4. The Claimant and the First Respondent entered into a written contract of employment on the date he started employment [CB 168] (the Employment Contract). That contract provided that the Claimant was to be paid a salary of £34,500 per annum gross.

5. The Claimant became a statutory director of the First Respondent with effect from 18 February 2021.

6. The Claimant and the First Respondent entered into a director’s service agreement on 18 February 2021, which took the form of a deed [CB 184] (the Service Agreement). By its terms, the Service Agreement was to apply from 19 July 2021, and noteworthy provisions include: a) The stipulation that the Claimant was employed as Director, and reported to the CEO; b) The Claimant was to be paid a salary of £34,500 per annum, inclusive of any fees due to him as an officer of the First Respondent; c) “We take a zero-tolerance approach to tax evasion. You must not engage in any form of facilitating tax evasion”; d) “If during the Appointment [defined as “the employment of you by us on the terms of this agreement”] you cease to be a director of the Company… the Appointment shall continue with you as an employee only and the terms of this agreement (other than those relating to the holding of the office of director) shall continue in full force and effect”; e) “No variation or agreed termination of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives)”; and

Case Number: 6006541/2026

3 of 15

f) “This agreement supersedes any previous oral or written agreements, negotiations or discussions between you and us in relation to the matters dealt within it. It contains the whole agreement between us and you relating to the Appointment as at the date of the agreement except for any terms implied by law that cannot be excluded by the agreement of the parties.” 7. The [APPELLANT] says, in his witness statement, that he was responsible for the smooth running of the [NAME], which included stock movement, consignor relationships, cash processes, HR administration, payroll coordination and general management, and that his responsibilities included payroll matters.

8. The [APPELLANT] says that the Service Agreement did not replace the Employment Contract, but rather that both continued to apply, and he was entitled to be paid £34,500 per annum pursuant to each of them, so £69,000 per annum in aggregate. The Respondents disagree, and say that the Service Agreement replaced the Employment Contract, so that at any one time the [APPELLANT] was only entitled to be paid £34,500 per annum until his salary increased to £48,000 per annum on 16 November 2021. Because the Respondents allege that the contract of employment between the Claimant and the First Respondent was tainted by illegality, the Tribunal needs to determine whether, after the Service Agreement was entered into, the Claimant continued to have contractual rights under the Employment Contract. It is plain that the Employment Contract was superseded by the Service Agreement with effect from 19 July 2021. The Service Agreement – which the [APPELLANT] agrees he entered into - contained an entire agreement clause, which explicitly stated that it superseded previous agreements “in relation to the matters dealt within it”. The [APPELLANT] avers that “the matters dealt within it” were confined to his appointment as a statutory director, and did not include his duties and rights as an employee, but that is plainly not correct from the Service Agreement’s terms. One example of this is the [APPELLANT] entitlement to salary in the Service Agreement is stated to be “inclusive of” any fees due to him as a director, so clearly encompass his salary as an employee as well. Another is that the termination provisions explicitly envisage a situation where the [APPELLANT] appointment as a statutory director is terminated but his employment subsists, and that clause states that the Service Agreement will continue to govern that employment relationship. The Tribunal is conscious that no evidence was heard on this point, but it is so plain that the Claimant and the First Respondent agreed that the Employment Contract did not subsist from 19 July 2021 onwards that there is no need to hear evidence on the matter.

9. The Respondents say that the [APPELLANT] salary remained at £48,000 per annum for the remainder of his employment. The [APPELLANT] disputes that the signature on the document purporting to record his agreement to the salary increase in November 2021 is genuine. That is not a matter that needs to be determined in this judgment.

Case Number: 6006541/2026

4 of 15

10. The Respondents dispute this account, but the [APPELLANT] says that he and the [NAME] Respondent (on the First Respondent’s behalf) agreed in January 2022 that his pay would be increased from £69,000 per annum to £90,000 per annum, but no formal updated contract was produced. The Claimant says: “Mr [APPELLANT] told me to take or make up the increased salary from the company as long as it was accounted for. I understood this as authorisation to retain cash sums as salary supplement against the difference between the payroll amount and the £90,000 package.” 11. The Claimant has produced a schedule listing the remuneration payments he received from the First Respondent [[NAME]], and he relies upon that schedule in his witness statement. That document records the [APPELLANT] assertion that his contracted salary per month was less than what HMRC was informed he was paid, and that some of the difference was received by him by way of cash drawn from the First Respondent (amounting to £29,198.22). The balance of what the [APPELLANT] says was his contracted salary and what he received is sought by him in his unauthorised deductions from wages complaint (£100,214.08). That uplift in his salary, hidden from HMRC on the [APPELLANT] case, is referred to in this judgment as his Hidden Salary.

12. The [APPELLANT] acknowledged in submissions that he knew this arrangement was depriving HMRC of income tax and National Insurance contributions payable on his Hidden Salary, and that he knew that the First Respondent misreported what he earned to HMRC. The Claimant did not correct that misinformation by informing HMRC himself of his true earnings.

13. The Respondents dispute this account, say that the Claimant was entitled to be paid £48,000 per annum, and say that he fraudulently took cash sums from the First Respondent (in a larger amount than the cash withdrawals the [APPELLANT] says he made).

14. On 23 February 2024, the First Respondent suspended the Claimant pending determination of allegations of misconduct, which included an allegation that the Claimant had embezzled funds from the First Respondent.

15. The Claimant was removed as a statutory director of the First Respondent with effect from 27 February 2024.

16. The Claimant was summarily dismissed for gross misconduct on 1 March 2024.

17. Following a period of ACAS Early Conciliation which began on 14 May 2024 and ended on 25 June 2024, the Claimant presented a claim to the Employment Tribunal on 23 July 2024.

18. In its Response to the Claim, the First Respondent raised a Counterclaim seeking £25,000 by way of damages for breach of contract from the Claimant.

Case Number: 6006541/2026

5 of 15

19. The Tribunal notified the Claimant of that Counterclaim, and of the fact that he would have to respond to it within 28 days or risk default judgment, but the Claimant did not respond to the Counterclaim. The hearing Representation 20. The [APPELLANT] appeared in person. The Respondents were represented in the hearing by Mr [COUNSEL], Counsel. Documentary evidence 21. Regrettably, the [COUNSEL] and the Respondents had not agreed a bundle. The Tribunal was therefore presented with a bundle from the Claimant running to 677 pages, and a different bundle from the Respondents running to 320 pages. Various applications 22. The Claimant applied to strike-out the Respondents’ Response to the Claim for their late compliance with case management orders, and for what he says is their failure to disclose all relevant documents that go to the value of the cash withdrawals he made from the First Respondent. Those applications were refused. A fair trial is still possible, and the dispute between the Parties as to the value of the cash he withdrew from the First Respondent is of little significance given the [APPELLANT] own case (as per his witness statement) is that he withdrew more than £29,000 in cash from the First Respondent, and the counterclaim is capped at £25,000. The key issue is whether those withdrawals were authorised or not, and the disclosure the [APPELLANT] says has not occurred does not relate to that.

23. The Respondents applied for the Tribunal to strike-out, or in the alternative, attach deposit orders, to the [APPELLANT] complaints, on the basis that the [APPELLANT] had no reasonable, or little reasonable, prospect of persuading the Tribunal that he had a contractual right to be paid £90,000 per annum. Mr [NAME] pointed to two “golden documents” in the Respondents’ bundle in support of those applications. The Employment Judge refused those applications, as the documents shown were not without some ambiguity that would be enlightened by evidence, which everyone is ready to give.

24. The Respondents also asked the Tribunal to issue a judgment under Rule 22 determining the Counterclaim. This was refused by the Employment Judge, given that determining the Counterclaim would, in effect, determine the Claim, because if the Claimant did breach the contract of employment between him and the First Respondent by stealing £41,000 of cash and stock items of further value – which is the substance of the Counterclaim – that would effectively determine the Claim as well. The Employment Judge was of the view that the evidence should be heard and the Claim and Counterclaim determined on their merits, and that the

Case Number: 6006541/2026

6 of 15

Respondents were not significantly disadvantaged by this given their high level of confidence in the merits of their position (as shown by their strike-out application). Self-incrimination 25. After a break for reading, the Employment Judge raised with the Parties the following points: a) There is a general privilege against self-incrimination in proceedings before the Employment Tribunal; b) The Claimant appears to have waived that privilege in respect of the PAYE obligations that applied to any salary to which he was entitled exceeding what was reported to HMRC. The [APPELLANT] own case appears to be that there were arrangements between him and the First Respondent whereby he had a superficial salary, and a higher real salary, apparently so as to defraud HMRC of income tax and National Insurance contribution payments; c) The Respondents have included WhatsApp messages between the Claimant and the [NAME] Respondent, in which: (i) The [NAME] Respondent refers to “HMRC Salary transferred as promised”, and the Claimant replies “Thank you so much. Kindly please if you transfer the rest Monday” [RB 165]; and (ii) The Claimant threatens to make “HMRC and Government aware of everything” [RB 171].

26. No evidence had been heard by that point.

27. The Claimant agreed that his Claim relies on his having been a party to the arrangement described above. He says that he did not instigate it (that he lays at Mr [NAME] door), but he acknowledged that he profited from it.

28. After a break during which Mr [APPELLANT] spoke to the [APPELLANT] – obviously unable to advise him, but to show him the pages in Harvey on Industrial Relations and Employment Law relating to illegal contracts. The Respondents’ strike-out application 29. Upon the Parties’ return, Mr [APPELLANT] confirmed that he had spoken to the Claimant, and that the Claimant wished to proceed with his Claim as pleaded (the Claimant confirmed this to the Employment Judge).

30. The Respondents then proceeded to make an application to strike-out all of the Claimant’s claim save for the complaints of protected disclosure detriment on the basis that the Claimant’s case relies upon his contract of employment with the First Respondent being tainted by illegality. Specifically, the Respondents seek

Case Number: 6006541/2026

7 of 15

strike-out on the basis that such complaints are scandalous (pursuant to Rule 38(1)(a) of the [NAME]). In support of this, Mr [NAME]: a) Pointed to the cases of [COMPANY] v Ahmed [1992] ICR 626 and Salvesen v Simons [1994] ICR 409, being cases about fraud against HMRC. Mr [NAME] observed that, unlike the waiters in the Hewcastle case, the Claimant here was very much involved in the arrangements of how he was paid, and was intrinsic in devising those arrangements; b) Even if the Claimant is correct, and the arrangement the Claimant says applied to his salary was devised by his employer, the [APPELLANT] contract is tainted by that illegality, which is relevant to all of his complaints save for the protected disclosure detriment complaints; c) Asserted that the proportionality assessment the Tribunal should engage with following the case of Patel v Mizra [2017] AC 467 should include the facts that: (i) The Claimant was a senior employee of the First Respondent; (ii) The Claimant was intrinsically involved in how he was paid; (iii) The Claimant had responsibility for the payroll function; (iv) The Claimant has admitted misappropriation of £29,000; (v) The Claimant has not returned the handbags belonging to the First Respondent which it also says he did not pay for; (vi) The disclosure the Claimant says he made was unrelated to the illegality infecting his contract; and (vii) The broad exception to the common law doctrine of illegality are tortious claims (such as discrimination), but both types of dismissal complaint rely upon the contract of employment between the Claimant and the First Respondent which is tainted by illegality. Those complaints seek an award of losses for unfair termination of an illegal contract.

31. When the Claimant was asked for his representations on the Respondents’ strike- out application, the [APPELLANT] made the following points: a) The First Respondent, as his employer, bore the responsibility to operate PAYE and report his earnings to HMRC; b) The Claimant did not work in the First Respondent’s Accounts Team; c) Mr [RESPONDENT] was very much involved in the day-to-day operation of the [NAME]; d) For much of the period concerned, the Claimant was not the sole statutory director of the First Respondent; e) The merits of his Claim are strong; and

Case Number: 6006541/2026

8 of 15

f) While he did know that the First Respondent had a lot of debt with HMRC, and the [NAME] Respondent asked the Claimant not to show his full salary to HMRC, the hoodwinking was being done by the First Respondent. Law Strike-out 32. Rule 38 of the [NAME] provides: “(1) The Tribunal may, on its own initiative or on the application of a party, strike out all or part of a claim, response or reply on any of the following grounds- (a) that it is scandalous or vexatious or has no reasonable prospect of success; (b) that the manner in which the proceedings have been conducted by or on behalf of the claimant or respondent (as the case may be) has been scandalous, unreasonable or vexatious; (c) for non-compliance with any of these Rules or with an order of the Tribunal; (d) that it has not been actively pursued; (e) that the Tribunal considers that it is no longer possible to have a fair hearing in respect of the claim, response or reply (or the part to be struck out).” 33. While the colloquial meaning of “scandalous” signifies something that shocks the speaker, in this context it means the misuse of the legal process to vilify others, or giving gratuitous insult to the tribunal in the course of such process ([NAME] v Southwark London Borough Council [2002] EWCA Civ 223).

34. An example of such conduct is that of the claimant in Jones v [APPELLANT] 17182/81. The tribunal considered that he was “hell bent upon causing the [COMPANY] and a number of individuals as much inconvenience, distress, embarrassment and expense as possible”, and “using this Tribunal as a means of obtaining information upon which to found an action in the High Court”, and that some of the allegations he made were also scandalous, in that the claimant blamed the respondent directors for accidents that occurred at work, deaths of individuals and the like. Illegality 35. A contract may: a) Be illegal from its inception, for example, because it breaches a statutory provision (e.g., a contract purportedly obliges a young child to carry out work); or

Case Number: 6006541/2026

9 of 15

b) Be legal to start off with, but become illegal at some point during its life (e.g., where there is a change in the arrangements for the payment of the employee to be in cash so as to defraud HMRC).

36. The breach of law in question may be of statute or the common law. a) If a breach of statute, the statute itself may stipulate the impact of including a contractual provision that breaches it (e.g., that it is void for both parties, it is void for one party, it attracts a penalty), or a court or tribunal may conclude that Parliament intended to prohibit a contract of a particular kind (a conclusion that rests on a test of necessity). b) At the common law, the doctrine of illegality may mean that the contract is void and unenforceable, where it would be harmful to the integrity of the legal system, or possibly to public morality, for it to be enforced. This is reflected in the sentiment: “[ADDRESS] will lend its aid to a man who founds his cause of action upon an immoral or illegal act”, from the case of [NAME[NAME] v [NAME], alias [NAME] (1775) 1 Cowp. 341). Even where the contract is void, this will not bar the enforcement of statutory torts such as discrimination complaints. Another response to illegality may be severance of the part of the contract that is illegal, with the remainder enforceable (Robinson v Al-Qasimi [2021] ICR 1533).

37. The determination of whether a contract, some aspect of which is illegal, is in fact void and unenforceable because of the common law doctrine of illegality will depend on whether, in the circumstances of the case, the relief claimed should be granted (Patel v Mizra [2017] AC 467). It should not be where to do so would result in some inconsistency damaging to the integrity of the legal system. This necessarily involves consideration of: a) The purpose of the law that the illegality breaches, and whether that purpose would be enhanced by the claim being refused; b) Any other relevant public policy which might be affected by the denial of the claim; and c) Whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the [NAME].

38. The first two considerations are generally to be assessed at a relatively high level of generality (but not evaluated), but the third requires close scrutiny (Stoffel & Co v Grondona [2020] UKSC 42). Lord Lloyd-Jones, giving the judgment of the Supreme Court in that case, noted that: “since the overriding consideration is the damage that might be done to the integrity of the legal system by its adopting contradictory positions, it may not be necessary in every case to complete an exhaustive examination of all stages of the trio of considerations. If, on an examination of the relevant policy considerations, the clear conclusion emerges that the defence should not be

Case Number: 6006541/2026

10 of 15

allowed, there will be no need to go on to consider proportionality, because there is no risk of disproportionate harm to the claimant by refusing relief to which he or she would otherwise be entitled. If, on the other hand, a balancing of the policy considerations suggests a denial of the claim, it will be necessary to go on to consider proportionality” [26].

39. There are a range of matters relevant to the proportionality question, and those will be case-specific, but the Supreme Court in [NAME] identified the following potentially relevant factors: a) The seriousness of the illegal conduct; b) The centrality of the illegal conduct to the contract; c) Whether the illegality was intention; and d) Whether there was a marked disparity in the parties’ respective culpability.

40. Lord [NAME], giving the leading judgment of the majority in [NAME] also noted that [NAME] (then an academic, subsequently a member of the Supreme Court) helpfully suggested further factors: a) Whether the party seeking enforcement knew of, or intended, the illegal conduct; b) The seriousness of denying enforcement to the party seeking to enforce the contract; c) Whether denying enforcement will act as a deterrent to conduct that is illegal or contrary to public policy; d) Whether denying enforcement will ensure that the party seeking enforcement does not profit from the illegal conduct; and e) Whether denying enforcement will avoid inconsistency in the law (furthering integrity of the legal system).

41. The [NAME] case involved a significant development in the common law on illegality, but it has not rendered all earlier case law irrelevant. Underhill LJ concluded in the Court of Appeal case of Okedina v Chikale [2019] IRLR 905 that the [NAME] case of [NAME] v [NAME] [COMPANY] [2000] IRLR 578 was still good law, because nothing in [NAME] was inconsistent with [NAME] as regards cases where there has been illegal performance of a contract by a party who knowingly participated in that illegal performance. [NAME] was a case where the employee had (at best) acquiesced in her employer’s conduct in paying part of her wages in cash to avoid paying tax on them – she had not suggested the scheme, nor benefited from it. [ADDRESS] considered her knowledge of the fact that she was paid partly in cash did not render that contract unenforceable. 42. [ADDRESS] of Appeal in [NAME] found that an employee who had previously not declared her earnings from her employment with the respondent or paid tax on them for a period which concluded three years before her dismissal was not to

Case Number: 6006541/2026

11 of 15

be denied her ability to pursue complaints of unfair and wrongful dismissal because of that illegality. [ADDRESS] identified further relevant factors (on those facts) to the question of proportionality to those identified in [NAME] as being: a) The seriousness of the illegality; b) How long it lasted for; and c) How closely it is connected to the nature of the claim now being made.

43. The Courts in [NAME] and [NAME] both were of the view that ‘knowledge plus participation’ is a necessary, though not a sufficient criterion for the common law doctrine of illegality to succeed. Applying the law to the Respondents’ application here 44. The Tribunal is not required to determine whether the Claimant’s contention, that the First Respondent was obliged to pay him the Hidden Salary as well as the salary he was reported as having earned to HMRC in order to determine the Respondents’ strike-out application. The Tribunal merely has to decide whether, if the Claimant’s contention is right, those parts of his Claim that the Respondents say should be struck out pursuant to the common law doctrine of illegality should be struck out. Is Rule 38(1)(a) engaged? 45. Significant parts of the [APPELLANT] case rests on his contention that there was an arrangement between him and the First Respondent for a significant amount of his earnings to be hidden from HMRC so as to avoid income tax and National Insurance contributions on his Hidden Salary. For the Claimant to have been involved in such a subterfuge, avoiding the Claimant’s own obligations to pay income tax and employee’s National Insurance contributions (as well as obligations on the First Respondent to operate PAYE on his behalf and report the Hidden Salary to HMRC), and then to petition the Tribunal for enforcement of his rights to be paid the Hidden Salary, and related complaints, “scandalous” in a way that engages Rule 38(1)(a) of the [NAME]. It is a misuse of the judicial process to ask the Tribunal to assist the [APPELLANT] in upholding an arrangement that, on the [APPELLANT] case, was entered into to avoid legal obligations.

46. As to whether the Tribunal should use the discretionary power in Rule 38(1)(a) to strike-out parts of the Claim, that engages the question of whether striking out is a proportionate response to the scandalous behaviour. To answer this question, the Tribunal turns to how the common law doctrine of illegality applies here. The common law doctrine of illegality 47. The contractual arrangements between the First Respondent and the Claimant are not such that the Respondents contend that the Employment Contract or the Service Agreement were illegal from the outset. On the Claimant’s case, the

Case Number: 6006541/2026

12 of 15

Respondents say, the issue arose in January 2022, when the [NAME] Respondent (on the First Respondent’s behalf) agreed to pay the Claimant the Hidden Salary. By that time, the written document governing the employment and statutory director relationships between the Claimant and the First Respondent was the Service Agreement.

48. As per the case of [NAME], the Tribunal must consider three matters when determining whether the common law doctrine of illegality means that the Claimant should be granted the relief he seeks, relying on the Service Agreement (for his wrongful and unfair dismissal complaints, and his other two breach of contracts complaints), the Hidden Salary arrangement (for his unauthorised deductions from wages complaint): a) The purpose of the law that the illegality breaches, and whether that purpose would be enhanced by the claim being refused; b) Any other relevant public policy which might be affected by the denial of the claim; and c) Whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the [NAME].

49. The purpose of the legislative provisions obliging the Claimant to pay income tax and employee’s National Insurance contributions, and to inform HMRC if they have the incorrect information about his earnings, is to fund the public services upon which everyone living in this country relies. Refusing the Claimant the relief he seeks would discourage him and others from entering into similar arrangements in the future, thereby furthering the legislative purposes. By contrast, granting the Claimant the relief he seeks would ‘fly in the face’ of that legislative purpose. That is particularly so when the funds raised from matters such as the collection of taxation and National Insurance contributions funds public services such as the service provided by the Employment Tribunal.

50. This significant and weighty public policy – that we all pay our share for our collective benefit – indirectly affects all other public policies, given all require funds to enable their pursuit. There is no other public policy that any Party has brought to the Tribunal’s attention that would be affected by the denial of those parts of the Claim that the Respondents say should be struck-out for illegality.

51. As for whether denial of the Claim save for the protected disclosure detriment complaints would be a proportionate response to the illegality, the Tribunal notes that: a) It is not the purpose of this Employment Tribunal to mete out punishment to the Claimant – that is the role of the [NAME], and potentially HMRC’s civil powers; b) The conduct in question is serious – fraud on the State – but this is often thought to be a victimless crime, without the personal implications of other

Case Number: 6006541/2026

13 of 15

cases sometimes seen by the Employment Tribunal, where there may be human trafficking, or other matters with individuals who have directly suffered the consequences of that illegality; c) The illegality was central to the Hidden Salary arrangement relied upon by the Claimant. Moreover, it was central to the Service Agreement as well, because if the Claimant’s contention about the Hidden Salary arrangement is right, it makes a mockery of the rights and duties the Claimant was to perform as a statutory director. d) The [APPELLANT] says that the Hidden Salary arrangements were instigated by the [NAME] Respondent, and that he went along with it. This is, frankly, appalling. He was a senior employee of the First Respondent with, as he states in his witness statement, responsibility for payroll matters. The [APPELLANT] contends that he “blew the whistle” about illegal immigration practices at the First Respondent because of his concern about his own liability as well as that of the First Respondent. It appears that the reason he did not have the same concerns about the Hidden Salary arrangements is the significant financial benefit he received from avoiding tax. e) If the [APPELLANT] contention about the Hidden Salary arrangement is right, there is no marked disparity between his culpability and that of the [NAME] Respondent. The Claimant was senior enough to, on his case, command a significant true salary, and undertake duties as the most senior employee of the First Respondent and one of its statutory directors (at times, its only statutory director). The Claimant was not a junior employee. The correspondence he relies upon shows that he was strident in some of his communications with the [NAME] Respondent. It was absolutely open to the [APPELLANT] to speak up if he had concerns with this, and indeed, it was incumbent upon him to do so as a matter of common law, fiduciary duties and the terms of his Service Agreement about tax evasion. f) The Claimant had clear knowledge of the illegality of the Hidden Salary arrangement – the WhatsApp messages show that he threatened to inform HMRC and the Government about them if he was not paid what he considered he was owed by the First Respondent. g) Denying the Claimant the ability to enforce the complaints in his Claim (besides the protected disclosure detriment ones) would deny the Claimant the potential to recover, or be awarded, substantial damages – however, in truth a significant portion of those funds would rightly be due to HMRC in any event. Moreover, to do enable the Claimant’s enforcement of those rights when he has shown such contempt for his legal obligations to pay income tax and employee’s National Insurance contributions on the Hidden Salary, and for the First Respondent’s obligations to pay employer’s National Insurance contributions on it, and to report his

Case Number: 6006541/2026

14 of 15

earnings appropriately, would certainly call into question the integrity of the legal system. h) Denying the Claimant the enforcement he seeks would act as a deterrent to him and others of similar kinds of conduct in the future, and would ensure he does not benefit from an illegal contract. i) The illegality in this case lasted, on the [APPELLANT] case, from January 2022 to 1 March 2024 – this was not a brief period, or a time separated from the events about which he complains in connection with his dismissal- related complaints. The illegality subsisted, and (on his case) was an intrinsic part of the contractual arrangements between them. j) The opacity of the Hidden Salary arrangement has given rise to questions about the proprietary of the Claimant’s admitted cash withdrawals. While the Respondents’ contention that the Claimant admitted misappropriating £29,000 worth of cash is incorrect (the [APPELLANT] says it was agreed with the [NAME] Respondent that he would take cash sums to make up his Hidden Salary), the secret nature of this arrangement has led to confusion and difficulty about its execution. A significant part of the Claimant’s Claim is his questioning the fairness of his dismissal and his summary dismissal – substantial parts of that would have been avoided by a transparent, open arrangement for him to be paid the salary he says he was entitled to. It is not an appropriate use of the Tribunal resources to police hidden arrangements such as this.

52. Taking account of all the above considerations, it is abundantly clear that it is proportionate for the Claimant to be denied relief for his complaints of: a) Unauthorised deductions from wages; b) Unfair dismissal (both ordinary and automatic); c) Wrongful dismissal; d) Breach of contract in connection with the car lease arrangement (part of, the [APPELLANT] avers, his remuneration package); and e) Breach of contract relating to his removal as a statutory director (for which the Claimant seeks damages).

53. The Tribunal judges that it is not appropriate or feasible to sever the illegal parts of the contractual arrangements between the [APPELLANT] and the First Respondent from the other parts – the illegality infected the essence of the wage-work bargain they struck (on the [APPELLANT] case) from January 2022 onwards.

54. In the Tribunal’s firm view, providing the Claimant the relief he seeks from these complaints would damage the integrity of the legal system. Use of the Employment Tribunal to enforce rights the Claimant asserts on the back of an arrangement designed to avoid paying income tax and National Insurance contributions would be entirely inconsistent with the interests of justice.

Case Number: 6006541/2026

15 of 15

Conclusions 55. For all of the above reasons, all of the [APPELLANT] complaints are struck out, save for his complaints of protected disclosure detriment. 56. The protected disclosure detriment complaints, and the Counterclaim, will now proceed to be determined in the remainder of this listing.

Employment Judge Ramsden Judgment given orally: 2nd June 2026

JUDGMENT AND REASONS SENT TO THE PARTIES ON 5th June 2026 For the Tribunal Office

Public access to employment tribunal decisions Judgments and reasons for the judgments are published, in full, online at www.gov.uk/employment- tribunal-decisions shortly after a copy has been sent to the claimant(s) and respondent(s) in a case.

Recording and Transcription Please note that if a Tribunal hearing has been recorded you may request a transcript of the recording, for which a charge may be payable. If a transcript is produced it will not include any oral judgment or reasons given at the hearing. The transcript will not be checked, approved or verified by a judge. There is more information in the joint Presidential Practice Direction on the Recording and Transcription of Hearings, and accompanying Guidance, which can be found here: https://www.judiciary.uk/guidance-and-resources/employment-rules-and-legislation-practice-directions/